HC Deb 07 March 1979 vol 963 cc1415-46

11.30 p.m.

The Minister of State, Northern Ireland Office (Mr. J. D. Concannon)

I beg to move, That the draft Aircraft and Shipbuilding Industries (Northern Ireland) Order 1979, which was laid before this House on 7 February, be approved. I have been known to move Northern Ireland orders with a very brief speech at this time of the evening, but on this occasion I apologise in advance for a rather longer introduction of the order because I do not believe that it would be for the good of the House if I did not go into matters in some depth, since these are two of the most important industries in Northern Ireland and what we are doing tonight is of considerable significance.

The purpose of the draft order is to establish an appropriate framework for the relationship between the Northern Ireland Department of Commerce and the two State-owned companies of Harland and Wolff and Short Brothers which respectively constitute the shipbuilding and aircraft industries in Northern Ireland. The Department acquired the shares of Harland and Wolff Limited in 1975 under the Shipbuilding Industry (No. 2) (Northern Ireland) Order 1975, and it became the majority shareholder in Short Brothers Limited in 1976, with over 70 per cent. of the issued share capital, the balance being held by the Department of Industry.

In essence, the order is a recognition of the special need for close and continuous contact between the Government and these companies because of their publicly-owned status and their vital importance to the economic and industrial life of Northern Ireland. It does not represent any radical new departure in the Government's projected role. It is basically a formalisation of the closer relationships which are required and which have in fact been developing in recent years.

The immediate stimulus to new legislation comes from the fact that the Department's powers to provide financial assistance to Harland and Wolff under the No. 2 order of 1975 will expire on 31 March 1979. That order was conceived as an interim measure, with the main aim of enabling the company to complete its then order book by providing for assistance of up to £60 million from public funds.

It was hoped that Harland and Wolff would be able to operate on at least a break-even basis from 1979 onwards. As the House well knows, however, market conditions in shipbuilding have deteriorated very sharply since 1975, and the world shipbuilding industry has been going through a period of unprecedented crisis. Harland and Wolff is no exception, and it is clear that it will need Government financial assistance to survive in any form until conditions improve.

I could perhaps have sought the approval of the House to provide assistance simply by extending the time and money limits of the No. 2 order, or by dealing with Harland and Wolff under the general industries development legislation, as is currently done with Short Brothers. But I believe that it is right to take the opportunity to evolve a specific and more comprehensive framework for the Government's relationships with these two major publicly owned companies, tailored to their particular needs. This is consistent with the existence of legislation special to the aircraft and shipbuilding industries in Great Brtain.

I am glad that this order gives the House an opportunity to discuss the present position and prospects of these two companies. Indeed, the order itself recognises the importance of ensuring that the House is regularly informed of their progress by providing for presentation of the companies' annual reports and accounts. Funding of the companies will be through the normal route in annual Estimates. Thus, Appropriation debates will provide further opportunity for examination and comment, and the funds allocated to these two companies will be differentiated in the Estimates more clearly than at present from funds for other industrial assistance.

Harland and Wolff and Short Brothers play a vital role in the economy of Northern Ireland. Between them they directly provide almost 14,000 jobs in the Belfast area, where total employment is about 300,000 and unemployment among men currently stands at over 10 per cent. There is also indirect employment to suppliers and sub-contractors on a substantial scale.

Both companies make technically sophisticated products and are important in maintaining Northern Ireland's reservoir of skills and technological expertise. They are both major exporters, competing in very difficult international markets, and to some extent they are ambassadors of Northern Ireland industry throughout the world.

It is of the greatest importance that the companies continue to make these contributions to the economic life of the Province, and it is the aim of the draft order to create a structure within which a rational and informed approach to their futures can be developed. Such an approach will have to take account of many factors, including market conditions, the Government's international obligations concerning the level and character of aid to the industries, the constraints on the use of public funds and, perhaps most important of all, the competitive performance of the companies themselves. I believe that the procedures envisaged in the proposed order will provide the basis for the co-operation between the Government and the companies that will be needed to achieve such an approach.

I should like to look very briefly at each of the companies—first, Harland and Wolff. The greatest single problem hanging over any shipbuilding enterprise at present is the continuing severe depression in the industry. As a result of the world trade recession, the demand for shipping has declined seriously. Many vessels are laid up for lack of economic employment and freight rates have been very low for the last three or four years. Orders from shipowners for new vessels have, naturally, been scarce. On the other hand, world shipbuilding capacity, encouraged by the boom period in the early 1970s, has increased dramatically. Shipyards in the United Kingdom all have to contend with fierce competition and low prices. State intervention in favour of the shipbuilding industry has proved unavoidable, in one form or another, throughout Western Europe. It seems likely to continue for some years to come.

Harland and Wolff is as much affected by the market conditions as any other yard and thus, despite the very real improvements in its performance since 1975, it finds itself still in need of Government assistance. But in 1975, as I have said, assistance was provided to enable the yard to reorganise and to complete an existing order book which for various reasons had been delayed and could not be carried through without substantial losses. Now it is a question of providing assistance to secure any orders at all and to help the yard survive until trading conditions improve.

The improvements in Harland's performance have been significant. There has been better productivity, industrial relations have been excellent, with an almost complete absence of disruption, and the use of the £60 million approved in 1975 has been effective, to the extent that it has been possible to support some new orders from it as well as to complete the 1975 order book. Although the trade unions have not yet filled the places available to them on the company's board, there has been much progress on worker participation below board which has resulted in a generally improved climate between management and work force. In fact, we have not had what could be called a serious disruption in the shipyard since 1974.

Mr. Gerard Fitt (Belfast, West)

The whole House will be delighted to hear of the co-operation between the trade unions and management at Harland and Wolff. Has my right hon. Friend heard the very disturbing news from Northern Ireland tonight to the effect that the management of Grunwick has stated that the factory may close because of a fight between two of the main unions? Can he give the House an assurance that he will use all the resources of his Department to try to resolve this dispute?

Mr. Deputy Speaker (Sir Myer Galpern):

Order. We are discussing Harland and Wolff.

Mr. Concannon

My short answer to my hon. Friend is that I will look at that matter first thing in the morning.

In short, the company has shown that it can surmount difficulties and has proved itself to be as worthy of support in today's conditions as its counterparts in Great Britain.

Nevertheless, further reductions in manpower seem inevitable at Harlands, as elsewhere. Already there has been a decline in employment to 7,700 as against 10,000 in 1974. Northern Ireland Members can recall the days when there were over 20,000 working in this shipyard.

The company is doing all it can to win new ship orders. It is also seeking suitable work outside the traditional shipbuilding field, and it has had some notable success. Diversification, however, cannot be expected in the short term to provide alternative employment for all surplus shipbuilding labour. Workers made redundant at Harlands will qualify for compensation under the special shipbuilding redundancy scheme on the same terms as workers in British Shipbuilders, and this will be of great assistance in accomplishing an orderly diminution of the work force. Nevertheless, the prospect of redundancies and uncertainty about the future inevitably has a dampening effect on morale. But, on the whole, the company remains in good heart and we must give it the chance to survive and strengthen itself for whatever opportunities the future may offer.

As hon. Members are aware, financial assistance in shipbuilding in member States is subject to the approval of the EEC Commission. The fourth directive of the EEC, introduced in April 1978, aims at preventing distortion in competition between member States as a result of national shipbuilding aids. The directive recognises that, while the crisis lasts, State aids are necessary to prevent the complete collapse of European shipbuilding.

The Government's detailed proposals for assistance to Harland and Wolff over the next two years are currently under discussion with the Commission and I have to report that the discussions are not proving easy. I am, therefore, not yet in a position to make any definitive statement about our proposals. The negotiations are continuing and we shall seek to ensure that the company is enabled to adapt to current conditions and that its capacity to respond to future improvement in the market is maintained.

Mr. James Molyneaux (Antrim, South)

While we appreciate all that this Government have done to maintain the level of activity in the shipyards of Belfast, may I ask whether the Minister of State feels that it is intolerable that the EEC, which claims to have the interests of the peripheral regions at heart, should be an inhibiting factor upon future Government assistance? If necessary, will he seek the support of this House in any future negotiations in which he may find himself in difficulty with the EEC?

Mr. Concannon

The EEC Commission takes the view that the European shipbuilding industry must contract to a level more in line with its current, and likely future, market share. The Commission wishes to be assured that assistance provided by member States to their shipbuilding industries is linked with plans to restructure those industries to meet the changed world market situation. The proposals for assistance to Harland and Wolff are examined by the Commission in the light of this principle, as are proposals by any member State for assistance to a shipyard. The Commission has been sympathetic towards proposals for aid to Harland and Wolff in the light of the peculiar regional and political difficulties affecting employment in Northern Ireland. The Commission is questioning the latest proposals which I have put to it. Things are proving a little bit difficult and if I run into difficulties I shall seek support from the House.

I turn now to Short Brothers Ltd. The company has had a difficult few years. Trading results have been disappointing, with losses of £2.4 million. £5.4 million and £4.6 million respectively in the three years from 1975. It is not expected that its 1978 results will show an improvement. There were two main reasons for that state of affairs. One is that the company's productivity was poor, largely because of shop floor dissatisfaction with wage levels and the absence of effective incentive schemes. I am pleased to say that the introduction of a self-financing productivity scheme under phase 3 has led to a very marked improvement in output levels. Further improvement will, however, be needed if the company is to meet its obligations to customers and exploit the potential of its products to the full.

The other major reason was that the company was going through a period of development of new products, with heavy initial outlay on design, research and development and marketing which is not recoverable until these products begin selling in numbers. It is encouraging to note that the new products are now showing signs of increasing success. The SD3-30 commuter aircraft, in particular, is now selling well after its introduction into service in 1976. To date, 38 aircraft have been sold and there is every sign that a substantial market exists. Missile sales continue to be healthy and the company's new man-portable missile Blowpipe, now in service with the British and Canadian armed forces, is attracting growing overseas interest. Short's has established itself as the major European manufacturer of jet engine pods and its prospects in this and other aerostructure work remain good. Overall, therefore, the company's longer-term position looks hopeful provided that it can produce the goods with the necessary efficiency and at competitive prices.

In the immediate future, however, the company will require Government assistance, partly to meet operating losses, partly to re-equip and partly to finance the continuing development of existing products and research into successors. Any failure to keep up with competitors in technology, or to meet the technical standards looked for by the giant aircraft corporations when they are sub-contracting or seeking partners in any venture, could lead rapidly to commercial extinction.

In my statement to the House on 7 December 1978 I announced the acceptance of the company's five-year corporate plan for the five-year period up to 31 August 1982. As hon. Members will recall, the plan sets out challenging targets in productivity, output, product quality and competitiveness, all of which will be vital to the future success of this important company. The Government are prepared to play their part in support of the company and it remains for management and work force to achieve the output and quality necessary in this sophisticated industry. I have now looked at both companies' importance to Northern Ireland, their recent performance and market experience and their likely future development.

As hon. Members will realise from my earlier remarks, the order needs to be in place by 1 April, to take effect when the financial assistance provisions of the Shipbuilding Industry (No. 2) (Northern Ireland) Order 1975 expire. I believe that the order is an important one, with its objective of regulating the Government's relations with these two key companies in Northern Ireland. It provides a framework which is intended to enable these relations to be harmonious, practical and effective, and I believe it strikes a proper balance between the interests of the companies and the wider concerns of the Government and Northern Ireland. I commend it to the House.

11.48 p.m.

Mr. Airey Neave (Abingdon)

The Opposition agree with the Minister of State that this is an extremely important order in view of the anxious position of the principal companies to which reference is made. The companies constitute, as the explanatory document tells us, the two largest single manufacturing undertakings in Northern Ireland. We see no alternative to the continuation of financial assistance. However, I was glad that the right hon. Gentleman said that their competitive performance had to be taken into account in considering the working of the order.

Article 6 sets out the directions that the Northern Ireland Department of Commerce will be empowered to give. These are described as instructions of a general or specific character as to the conduct of a principal company of its undertaking ". It would be better that such directions should be generally known at the time they are issued. Under article 6 of the order there will be no reason why the Department should make the directions public. I take the view that there could be circumstances in which the Department gives confidential instructions which emerge publicly only when they are being put into effect. These might limit informed discussion of the value of the need for these directions.

These are the principal companies in Northern Ireland. The amount of money that we agree may be put towards their assistance is considerable. Will the Minister consider the point that directions under article 6 should be made public? Under subsections (5) and (6) of section 2 of the Aircraft and Shipbuilding Industries Act 1977 the Secretary of State for Industry is required to lay an order before the House for approval by affirmative resolution when he wishes to prescribe activities to be undertaken by the British Aerospace corporation and British Shipbuilders. Should not some provision be made for public scrutiny of directions issued by the Government in Northern Ireland in this case? I hope that the Minister will consider that a reasonable point.

As to the cost of these directions, the Minister may know that the White Paper of March 1978 on the nationalised industries, Cmnd. 7137, suggested that extra costs incurred by nationalised industries as a result of Government direction should be shown separately in the accounts of each industry. It might be worth urging that consideration be given to adopting this principle in Northern Ireland. I hope that the Minister will think that reasonable.

Apparently, the grants given specifically to Harland and Wolff and Short Brothers are in future to be included in the Appropriation orders for Northern Ireland. I think the Minister mentioned that. The House will wish to know the extent to which the grants are needed to carry out the directions from the Government. I think that the Minister agrees with that point.

On the question of Government subsidies generally, in Great Britain it is customary to publish the amount of the subsidies given when a new order is secured by the shipbuilding industry. The practice should be extended to Northern Ireland. I do not think that it applies at the moment. Perhaps the Minister will consider that.

The Minister referred to annual reports. There is an important point about annual reports in article 12. He mentioned the various documents set out in that article which will have to be produced for consideration. It might be a good idea to add to what is proposed in the order a provision that there should be a review of the company's performance—he mentioned the competitive performance of the companies as a matter to be taken into account—similar to those produced in Great Britain by British Shipbuilders and British Aerospace under section 5 of the Aircraft and Shipbuilding Industries Act 1977. That is done simply to bring the practice into line with what is being done in Great Britain. I hope that the Minister will consider that a reasonable point. There is no need to set it down specifically. However, a review of the company's performance would be valuable.

We shall want at some time a clear statement on the phased reduction of the work force at Harland and Wolff, which is now taking place, to establish how many jobs will be left when the rationalisation is complete, what size labour force is in view for the long term, and what will be the numbers after the shipbuilding redundancy scheme has taken effect.

The recently published discussion document on economic and social progress in Northern Ireland was referred to in the previous debate. It was prepared by the central economic service of the Department of Finance. It states that opportunities to diversify production into structural steel, motor cycle accessories and so forth are being sought. I have often questioned the Minister about diversification. Could he say whether this search is likely to yield any important results this year?

In 1978 the Minister announced an agreement between Harland and Wolff and a firm of mining engineers in Munich which saved 400 jobs. That was very welcome. Has the Minister any further projects of similar importance in hand that he could tell us about?

Finally, I refer to the question of naval orders, which I raised in the Appropriation debate on 11 December last. Has any progress been made there? The Minister said at that time in this House that he would consult his right hon. Friend the Secretary of State for Defence about that. It will be remembered that it was suggested that some naval work of refitting ships which had been built at Harland and Wolff could be turned over to that yard. Will the Minister tell us whether the Secretary of State for Defence has been able to help in that regard?

11.55 p.m.

Mr. Harold McCusker (Armagh)

Many people in the House, and in Northern Ireland and further afield, will be grateful that the Minister broke with his usual procedure and gave us a very full review of the performances of the two companies, which represent the first and third largest employers of labour in the Province and, therefore, as he has emphasised, are of major significance to the economy and the employment prospects of the Province.

Although one was looking for encouragement and was able to pick up some crumbs of encouragement from the report which the Minister has given us, one must nevertheless be realistic and to reflect sombrely on the fact that Harland and Wolff will still require subsidy to enable it even to compete still for orders, and will therefore be obtaining uneconomic orders in the foreseeable future. Short Brothers and Harland, despite the favourable reporting in the press of its success in selling a small commuter aircraft, will still be working at a loss for the foreseeable future. It certainly cannot be in the interest of the Province, in the interest of Belfast or in the interest of the employees of those two companies to be in that loss-making position for the foreseeable future.

The fact that the largest company in Northern Ireland is 100 per cent. publicly owned, and that the third largest company is 70 per cent. publicly owned, must give us all pause for thought.

I welcome the fact that the hon. Member for Abingdon (Mr. Neave) has said that his party acknowledges that these two companies must be kept in being, and that public funds will be required for that purpose, but we have to ask how long we can go on doing this. How long will it be necessary? I hope that it will not be necessary.

As the Minister has indicated, when world markets change, if we can make ourselves sufficiently efficient and sufficiently competitive and meet the quality standards that he has indicated, the two companies eventually will be viable and profitable. That is where the future must lie. From what the Minister has said, the work forces in the two companies now seem to realise that. If those two companies are virtually 100 per cent. publicly controlled, it is quite proper that the Government should bring forward an order to establish a structure and a procedure for dealing with them.

If ever a case could be made for publishing proposals for a draft order before a draft order, that case was made with this draft order, because there are substantial improvements in the draft as compared with the proposals for the draft. For example, in article 6 of the proposals for the draft it was stated: The Department may give directions of a general or specific character as to the conduct by a principal company or its undertaking ". That was virtually an open door for any interference which the Department of Commerce might have wanted in the affairs of the two companies. The aim is that those two companies are to become profitable and viable. The one sure way in which that would not be achieved would be if the Department of Commerce could interfere in every aspect of their working. I welcome the fact that article 6 now states that The Department may give directions of a general character ". The word "specific" has been removed, and those directions of a general character are limited to directions in relation to matters which appear to the Department to affect the public interest. I think that that is proper and correct and that it should prevent any of the abuses to which I have just referred.

There was good news this morning in the press about the order that BP has placed for six medium speed engines with the joint subsidiary, Harland-MAN. Article 6 of the order states: The Department may give directions of a general character…It shall be the duty of a principal company…to secure so far as appropriate, that each of its wholly owned subsidiaries also gives effect to any such directions ". Does that mean that in relation to the joint company, which is not a wholly-owned subsidiary and which encompasses the engine works of Harland and Wolff, the Department of Commerce would give directions as to the percentage owned by Harland and Wolff and that the company would have to implement those directions while the engine works which are part of the other organisation would be exempt? I should be interested to know how the relationship will work in the context of the order.

Another substantial improvement is clear when the original proposed article 10 is compared with the new article 10. The proposed article 10, dealing with certain ancillary duties of the Department of Commerce, stated that the Department's function was to encourage the promotion of industrial democracy in the undertakings of the principal companies and their subsidiaries. The draft with which we are dealing encourages the principal companies to promote industrial democracy in their undertakings ". That is a significant step forward. If there is to be greater participation in those companies and greater industrial democracy, it is better that the companies should have the duty of promoting industrial democracy and not, as was envisaged in the original proposal, that the Department of Commerce should take the lead.

I hope that no effort will be made to force the workers to participate in a scheme in which they are not interested. Certain attempts have been made to encourage the Harland and Wolff work force to participate in a scheme of industrial democracy. However, the work force have said that they do not wish to participate. I hope that it will continue in that way. When the work force wish to avail themselves of the opportunity, with a system and a structure which suits them, that will be the time to move. I hope that there will be no coercion.

The new order is more beneficial than the original order, in which the provision dealing with the relationship of the two Northern Ireland companies to British Aerospace and British Shipbuilders was too vague. It referred to the consultation and attempts being made to co-ordinate the activities of our two companies with the major corporations. We welcome the new draft which specifically lays down that it is the duty of the Department of Commerce to consult with appropriate United Kingdom Government Departments with regard to any measures necessary to co-ordinate the activities of Harland and Wolff and Short Brothers with those of British Aerospace and British Shipbuilders ". We wished Harland and Wolff to be part of British Shipbuilders and Short Brothers to be part of British Aerospace. Our wish was not granted, but the order makes the relationship as close as possible.

When does the Minister hope to lay a copy of the documents mentioned in paragraph (2) before the House? Does the Minister believe that, whatever we have one day in Northern Ireland, it will be anything like the Assembly mentioned in the order? How long will that myth be perpetuated? If we have to say something, can we not at least stop referring to a body which the Government know will never return? That is my only real criticism of the order, but I hope that the Minister will be able to answer the queries that I have raised.

12.5 a.m.

Mr. Michael McNair-Wilson (Newbury)

The one part of the Minister's speech that I welcomed was that which said that these two State-owned industries are to come under closer scrutiny of the House. However, I would not want the right hon. Gentleman to think that his promise that we shall we able to discuss the industries on Appropriation orders or the fact that we are to have the accounts before us will be sufficient. The House has the ultimate responsibility for the industries and we cannot be expected to put up with so little scrutiny of companies which are increasingly coming to the taxpayer to be allowed to continue in existence.

The Minister of State will know that the order applies to the two companies in terms of the financial assistance that they are to receive, ministerial control over them and the way that they account for their actions. The right hon. Member for Down, South (Mr. Powell) said in the debate on the Appropriation order that the Comptroller and Auditor-General was already making useful contributions on certain industries in Northern Ireland. The right hon. Gentleman picked out particularly the SD3-30 aircraft project of Shorts. The Comptroller and Auditor-General is indeed producing a new form of scrutiny, but the scrutiny provided for in the order is not adequate for the House or for the taxpayer whose money always has to be taken to put into whatever companies are deemed worthy by Governments. Hon. Members, as representatives of the taxpayer, must insist that the Government bear the taxpayer more in mind.

The Minister of State will be aware that last year's White Paper on the nationalised industries agreed with the NEDO report that much more information must be made available to the Parliament and, thus, to the public if the lack of accountability between nationalised industries and Parliament were to be made good. If any hon. Member is interested, I suggest that he should read paragraph 29 on page 19 of the White Paper under the heading "Monitoring". I shall read only the first sentence which says: It is the responsibility of each board to monitor performance and efficiency within its industry but the Government agrees that it is also essential for the industries to account effectively to Parliament and to the public. It is indeed important that Governments should report to Parliament and the public. That is the burden of my remarks.

I should declare an interest since I have worked for Short Brothers and Harland and have had a long association with the firm for many years. I am also a member of the Select Committee on Nationalised Industries, so I have had the opportunity to see nationalised companies from both sides.

Since 1976, Short's has been in the red and has needed financial assistance to keep it in existence. The Government have given it an investment programme of £60 million to cover the next three years and I hope that that sum will not only be adequate for the major capital re-equipment programme for which it is earmarked, but will cover the additional funds that I believe that the firm will need when its present product range becomes too old to continue to produce orders.

The Minister of State knows as well as I do that the SD3-30 is a derivative of the Skyvan, which has been around for quite a number of years. Two airframes will not carry Short Brothers and Harland very far into the future. More money will be required if it is to continue to be an aircraft manufacturer manufacturing its own aeroplanes.

By the same token, Seacat and Tigercat are missiles that belong to another generation. They, too, are coming to the end of their effective lives. Looking at Short Brothers' future, we see two ageing air-frames and only one new product—the Blowpipe missile—to carry it into the next decade. Although we know that the firm is one of the largest manufacturers of pods for aero-engines in the world, I wonder whether there will be enough work on pods for the present work force.

Therefore, the firm's future requires more than just a three-year investment grant to carry it forward. It needs deep and important forward thinking. The Government must share some of their thoughts about Short Brothers with Parliament.

The situation at Harland and Wolff is much more serious. Its financial position can be described only as parlous. The chairman of the company made no secret of the fact in the annual report, where he pointed out that in order to maintain production at a satisfactory level, new orders must be obtained. We cannot expect to obtain a sufficiency of such orders at prices other than which will result in losses and in these circumstances therefore, whether or not we obtain a satisfactory level of work, losses are likely to continue for a number of years to come ". How many years to come? How different that statement is from the statement made by the the then Minister of State on 1 August 1975, in the debate on taking the company into State holding. I was present during the debate, when he said: I have spoken today and on previous occasions about the last chance, about there being no bottomless pit of public money and about the need for the company to demonstrate long before 1979 its ability to take on new work without loss—and I have said that if the company cannot do this it will be time for the Government to call a halt and to permit the rundown and even closure of the business ".—[Official Report, 1 August 1975; Vol. 896, c. 2480.] I do not doubt that the Minister meant those words when he said them, but, by goodness, he has been wrong. If we want an example of the danger of Ministers and Departments trying to set themselves up as industrial prophets, it is surely in that statement.

I even thought that the Minister of State tonight was a little optimistic. Mr. Ronald Punt's own words to the work force in February were: Our performance during 1978 was bad compared with what we have done in the past—our productivity fell and our programme slipped badly…It is up to each one of us to do his best, and the first step is to come here for eight hours a day and to work effectively for those eight hours…We can meet our delivery dates and get more orders, but not easily. It needs all of us to do it. If we don't, maybe no outsider will close us—they won't need to; we'll be doing it for them. That is straight talking, and it is rather different from what the Minister said. It is a managing director telling the members of his work force that the company's salvation is in their hands but that they are not grappling with the situation that faces them.

Mr. Concannon

I was in the Harland and Wolff shipyard yesterday with Mr. Ronnie Punt. I saw the film that he had put out, and I talked to all the shop stewards in that yard. I backed the comments that Mr. Punt had made. As I said earlier, since 1974 there has been no serious stoppage of any kind within the yard. Industrial relations are pretty good there. The members of the work force know what they have to do. They know that only they can save jobs in the yard. They are Harland and Wolff. That message has been put over to them, and they are responding. The shipyard is a different place from what it was five or six years ago.

Mr. McNair-Wilson

I appreciate what the right hon. Gentleman says, and I have no desire to argue or to contradict anything he said. What I really want to say refers rather to the remarks of my hon. Friend the Member for Abingdon (Mr. Neave) about accountability. I want to know how long we shall continue to treat the nationalised industries of Northern Ireland differently from the nationalised industries of Scotland, Wales or England.

I see no reason why Short's, Harland and Wolff, Ulster Omnibus or any other nationalised industry in Northern Ireland should not come under the scrutiny of the Select Committee on Nationalised Industries in this country. There is no special quality about those industries which sets them apart. But, at the moment, they come under no direct scrutiny from that Select Committee, set up by Parliament to look into the workings of the nationalised industries. Why should we expect to be able to interview British Aerospace and British Shipbuilders, question them closely and carry out in-depth inquiries into the way they handle their businesses while Short's and Harland and Wolff are kept sacrosanct and free from that sort of scrutiny?

I want to remind the Minister of State, if he does not already know, that to obtain the annual reports of those two State owned companies from the House of Commons Library is a very difficult task, as I have found in the last fortnight. Of the two, Harland and Wolff's report was the first to come. Short Brothers' report came this morning after a fortnight of requests from the House of Commons Library. I do not know what sort of world those companies think they are living in. I can only tell those who run them that, if they want the taxpayer to provide financial assistance, they should supply the information for the taxpayers' representatives to know how they are managing their affairs.

I hope that the Minister will make clear to those two companies that they have a responsibility, if not to the Select Committee on Nationalised Industries, then at least to the House of Commons, to ensure that their reports and accounts are placed in the Library.

I find a certain irony in the fact that as a member of that Select Committee I was taking part only this afternoon in our current inquiry into the relationship between Ministers, Parliament and nationalised industries about such matters as specific directions, accountability and the relationship of industries with Parliament. In this order, those companies are outside that scrutiny. In this order, there is no requirement and no need for those companies to put before this House the sort of information that we should be given. I am perhaps unfair. The order points out that the information is to be placed before the Assembly.

I have asked the House of Commons Library to check with the Northern Ireland Office. I am told that the obligation in article 12 of the order to lay accounts before the Assembly means that for the time being the companies are obliged to lay their accounts before the House of Commons. The Department of Commerce in Northern Ireland is for the time being a sub-section of the Northern Ireland Office and the Secretary of State for Northern Ireland answers questions on Short Brothers. It has been suggested in this debate that it is time to end this nonsense. Is it not time we stopped imagining that there is to be an Assembly? Is it not time that the report and accounts were placed before the House of Commons and we did away with all that palaver?

I cannot allow this debate to pass without asking the Government whether it would be better, before asking for large sums of money for these two industries, to use the affirmative resolution method to do so. Can the Government expect article 3 to be treated as a matter that only has to appear in the Appropriation debate? Can the House of Commons, Parliament and the taxpayer be expected to find millions of pounds for these companies without giving Parliament the chance to debate the amount of money, why it has to be spent and for what period it is intended to underwrite the future of these companies? Surely, if financial assistance is to be provided, Parliament should always have the chance to debate that assistance before it is given. After so many ill-starred projects, which Governments have so frequently supported over past decades, is there not a more pressing requirement to insist that there should be no financial assistance without Parliamentary scrutiny?

Sir Peter Parker recently told our committee that bringing British Rail's report and accounts to the Select Committee on Nationalised Industries was the equivalent of a shareholders' meeting for the chairman of a nationalised industry. All nationalised industries need those shareholders' meetings. Short's and Harland and Wolff are perhaps more in need of that sort of accountability than other industries I know.

I hope that the Minister will therefore take those comments from this debate and remind the relevant directors, managing directors and chairmen of what I have said.

I end with another comment from Mr. Punt. We should remember this because we are sometimes apt to think that we can make companies profitable, although those who run them cannot, and that we know what they should be doing when those who run them do not. In that address to the work force, he said: I can almost hear some of you saying, ' The Government must do something '. Yes, they can do something, and I think they want to and will do something, but they can only help us, they cannot solve our problems, only we can do that. He is right. We can provide the financial assistance. But let us be sure before we do it that we know what we are doing.

12.21 a.m.

Mr. William Craig (Belfast, East)

These two important firms are in my constituency, and I am greatly encouraged by the speeches so far. I am delighted to follow the hon. Member for Newbury (Mr. McNair-Wilson). I endorse substantially everything that he has said in one of the most realistic speeches that I have heard for a long time. It is easy to give way to pessimism in the situation that faces the shipbuilding world. I am glad that there is no sign of any hon. Member, and particularly the Government, doing so. Both these companies can survive and play a worthwhile role in the economy of Northern Ireland, provided that everyone concerned faces the fact.

I have no hang-ups about public ownership: I do not see it as a matter for doctrinaire politics. Public ownership has played and can play a useful part in any economy. But the one thing for which I have no time is the concept of public ownership that allows itself to be run by politicians, Government Departments and the like. Public ownership should ensure that the companies stand on their own feet—management and work force negotiating as they would in private enterprise.

I am glad that my hon. Friend the Member for Armagh (Mr. McCusker) drew attention to the improvements which have been made in the order. I am not entirely satisfied with the order as it is, but at least I can support it with an easier conscience, because as originally proposed it smacked of the desire of Government Departments to interfere too much with the management of the firms. We are very appreciative of the fact that our views were considered and that there has been a considerable improvement.

I share my hon. Friend's views about articles 6 and 10. I am a great believer in industrial democracy, particularly if it will help us to get away from the adversarial feeling between management and work force. But this is something to be achieved by management and work force, not decided in a Government Department or even a Parliament. Each industry will work out what is best suited to its own needs.

It is unfortunate that the Government feel that they have to put a political point like this into a statutory obligation. I do not know how I am going to hold the Minister or his successors accountable in this respect or discover whether they are discharging their duties to encourage industrial democracy or what the order really means by industrial democracy. The important thing is that the order now recognises that it is for the company to promote the industrial democracy and for the Department to encourage it.

Article 10(b) is a considerable improvement. I can report from first-hand experience of the work force that there is considerable anxiety that there may not be effective co-operation and liaison with British Aerospace and British Shipbuilders. I have no doubt that in assuming this obligation the Department will help to allay those fears. But I should have liked some indication of how the Department sees this co-ordination and liaison. I feel that it is not enough for the appropriate Government Departments to discuss the matter. There should be liaison at all levels. The directors in these companies should be talking with the directors of British Shipbuilders and British Aerospace. Further, the trade unions in these important firms should have a link with what is happening in the two corporations.

Every time I meet the workers I am questioned about how the undertaking that was given in an earlier debate will be fulfilled. I hope that the Minister of State will take the opportunity of spelling out how the co-ordination and liaison will occur.

I shall not dwell too much on article 12 and the Assembly. If anyone believes that the ill-fated power sharing Assembly will come back into being, he is living in cloud-cuckoo land. But I believe that there will be some sort of parliamentary Assembly in the very near future, and in that respect I hope that article 12 envisages a continuing development for a new type of democratic Assembly, rather than harking back to the past. But it is a constitutional necessity, and I should not dwell too much on the point.

I was interested in the Minister's report on Harland and Wolff, particularly about industrial relations. I believe that things are improving, but I suspect that they are not improving fast enough. I suspect that there is probably a lack of confidence. Whether the Minister and his Department can do anything to provide that confidence I do not know. But I know that the protracted arbitration about the two bulk carriers seems to be proceeding far too slowly. This uncertainty must be removed as speedily as possible. Once that cloud is lifted from the yard there will be greater progress in securing more effective use of the manpower in the yard.

I am pleased that some progress has been made with diversification, but it is only tiny, and I suspect that events in the yard now are limiting the opportunities for diversification.

I welcome the improvement in the engine works, but associated with the engine works is the foundry. I understand that the foundry is in a delicate state. It might survive as a viable unit. The possession of a good modern foundry is an asset when one is seeking diversification. I hope that steps will be taken to assure those employed in the foundry that it is not the intention of the company or of the Government to see the yard without a foundry.

I am considerably heartened by the progress made at Short Brothers. The company is still in the red, but there is a new dynamic approach, both by management and by labour, that is sure to bring a reward in the near future. The hon. Member for Newbury made a valid point. The sum of £60 million for three years is not enough to enable management to plan far into the future and particularly to develop new products.

What people think are facts but which are not can sometimes be just as damaging as facts. I know that from time to time workers feel that management is hiding behind the Department and that certain things do not happen because the Department is standing in the way. Perhaps there is a grain of truth in that. Perhaps the Civil Service procedures are too slow and too cumbersome to take commercial decisions. I am thinking in particular of the Britten-Norman project which, if Short Brothers had been able to acquire it, would have been a useful base for widening the range of its products, and establishing contacts with a new range of customers.

Some people will say that because the Government took so long in assessing the prospects we missed the opportunity. I have been assured by the Minister that that is not the case. But he must be aware that no matter how often one repeats assurances the suspicion is still there that commercial decision-taking is affected because of the need to work so closely with the Department. I hope that there will be positive evidence that management is really free to manage and does not have to have commercial decisions rubber-stamped by the Department.

I was recently in Norway on a Western European Union visit and I was fortunate to meet Her Majesty's ambassador in Oslo. I was delighted to hear that the Minister and his Department have their eyes on prospects in Norway and I hope that he will keep up the pressure.

Harland and Wolff has had a long and happy history of good business and good relationships with Norway. I believe that Norway can provide us with opportunities for more than ships. I met one Norwegian admiral who spoke in glowing terms of Skyvan. He had, unfortunately, never heard of the SD3-30. I hope that when the Minister builds up this campaign and the contacts with Norway he will bear in mind that within that country there are three feeder airlines. I believe that this aircraft would suit them admirably.

Mr. Concannon

I am pleased to hear the remarks by the right hon. Gentleman about Norway. He understands that I was about to pay a visit there when unfortunately the industrial relations problems in Northern Ireland precluded that visit. That is the second visit which has had to be cancelled at short notice, but it is now back on my itinerary. Some of the problems in Northern Ireland act to prevent me from moving about on occasion.

Mr. Craig

I understand that, and I am not criticising the Minister. I may disagree with him on some issues, but I compliment him on his energy and drive in this matter. The whole of Northern Ireland admires the way he throws himself into his work.

I spoke to the ambassador to the Court of St. James from South Korea. He is seriously thinking of visiting Northern Ireland in the near future. I hope that the Minister will ensure that that visit takes place and that the ambassador visits East Belfast, Harland and Wolff and Short Brothers. We have sold marine engines to South Korea and we should be able to sell aircraft engines. I am not suggesting that the Department takes over the sales and marketing responsibility of the companies, but it could open many doors.

The Minister knows of the serious disparity in wage levels between workers in Short's and in the rest of the British aerospace industry. I understand that the matter is to be investigated by an industrial court. It is an unhappy truth that the work force at Short's has suffered more severely from Government incomes policies than any other industry that I can think of. We have got over one hurdle and that has helped the firm considerably.

I hope that the present incomes policy will not stand in the way of correcting the serious unfairness. I cannot ask the Minister to make any pronouncements in advance of the findings of the industrial court, but if this is stowed up to much, stresses and strains will be imposed on the work force to its long-term disadvantage. We must keep the skills in the firm. I am anxious lest there is a drift away from the firm.

I have pleasure in supporting the order, in spite of its deficiencies. I hope that we shall make good progress.

12.37 a.m.

Rev. Ian Paisley (Antrim, North)

We have tonight illustrated some of the iniquities of direct rule. At this early morning hour we are discussing two of Northern Ireland's greatest industries. More and more, Northern Ireland affairs are pushed as an appendix to the business of the House. I disagree with the hon. Member for Newbury (Mr. McNair-Wilson). I hope that the business of Northern Ireland will soon be out of this House and that Northern Ireland men and women will be able to scrutinise their own affairs. I hope and pray that that day will come speedily.

I am not pessimistic as the hon. Member for Newbury is. He said that a Northern Ireland Parliament will never come, that we are doomed to being a semi-colonial State and that our business will be tacked on at the end of the day when the House is empty of all but those who have a constituency interest and those such as the hon. Member who have shown a continued interest in Northern Ireland.

I am happy that the Minister of State presented the order tonight. Some of his colleagues might not have had such a good reception in the House. We might at times disagree with the Minister of State but he has without doubt given of his time, talents and energy to bring industry and employment to Northern Ireland. The people of Northern Ireland appreciate that. They see that he is at least doing his best in difficult circumstances to keep employment in Northern Ireland. Perhaps those words, coming from a severe critic of his Government, will give him some little solace in his task. I mean them, of course, not as a kiss of death. He is all right at this time.

There are some points to be underlined in the context of the order, and one of them has been seriously raised already. Many people in Northern Ireland have a suspicion that the reason why these two industries were not brought into the British family was that the British Government hoped that some day a Parliament in Northern Ireland would have to take the sad decision and announce the end of public financing of the companies, the idea being that that terrible act would be imputed not to this House but to a future Parliament in Northern Ireland.

That suspicion is held by many, and it is certainly in my mind, because many of us thought—I know that the right hon. Member for Belfast, East (Mr. Craig) did not agree with us—that the answer lay in another direction. I say this in response to what was said by the hon. Member for Newbury. If these two industries had been in the British family, the scrutiny procedures of the House could have been brought into play and they would have been subject to all the tests to which the hon. Gentleman rightly says they should be subject. I am in full agreement with the view that where public money is put into any company Parliament should exercise its right to scrutinise, to question and to probe in order to satisfy itself as to the use made of that investment.

Mr. Craig

Will the hon. Gentleman be a little more precise? Is he saying that, in the event of the return to a parliamentary institution in Northern Ireland, these two important industries should not be under the supervision and direction of the Government of Northern Ireland?

Rev. Ian Paisley

No, I am not saying that at all. I am saying exactly the opposite, that if we have a Parliament in Northern Ireland and we take over the responsibility, that Parliament will have to shoulder it, but in shouldering the responsibility that Parliament would be in a position to do with these companies in the scrutiny of their operations what the Select Committee here is able to do in respect of the British nationalised industries at present.

That is an important matter. Indeed, the whole business of accountability of all Government projects in Northern Ireland is seriously deficient or in abeyance now, for the simple reason that no Member from Northern Ireland is on the Public Accounts Committee and there is no proper scrutiny of accounts from Northern Ireland. We have had scandals in the Housing Executive, and heaven knows how many other scandals have gone undiscovered because there has been no public accountability in this House and no probing by Northern Ireland Members who know something about what happens there. Therefore, when the hon. Member for Newbury stresses that matter, he is stressing something on which I am with him 100 per cent.

The Minister of State said that in Appropriation debates we should have an opportunity to discuss these matters, but we should have only such a discussion as we are having tonight, and it would be useless and fruitless. We could all make our speeches, for 15 minutes or so at a time, and after one and a half hours the Minister would say "I am sorry that I cannot answer all hon. Members now. They did not give me notice of all their questions. But I shall be writing to them."

My experience is that, even if we give the Minister time to answer, he never answers anyway, so one might as well save one's time, because he has to write. Sometimes, indeed, the notes which are passed to him are not accurate. We had an example of that in the previous debate, when the right hon. Member for Down, South (Mr. Powell) caught the Minister out completely on one of the notes which had been sent to him.

These two industries are at the very heart of our economy. Although there were some crumbs of comfort in what the Minister said, and although I appreciate everything that he said, if these two industries are not able by their own efforts to withdraw from the precipice towards which they are heading, I can see darkness at the end of the tunnel. The workers in these two industries and the people of Northern Ireland in general should note that.

As the right hon. Member for Belfast, East said, the parity of the wages of workers in these industries with the wages of other workers is important. If workers in these industries are not paid the rate for the job, the best men will go to firms which pay the proper rate. Tonight we must face the fact that these two great industries which are essential to the economic wellbeing of our community are in jeopardy and that what is happening tonight is a mere holding operation. The Government hope that there will be an upturn in the world economy and that in some way these two industries will become viable.

The hon. Member for Newbury asked the important question as to how long this process would continue. In a previous debate the Minister said that there was not a bottomless purse. There is thus incontrovertible evidence that an effort must be made to bring business to these important companies. The sad thing about Harland and Wolff is the court cases which are pending. These should be resolved as quickly as possible.

May I stress once again that the fact that we have only one and a half hours in which to debate an important matter concerning the entire welfare of Northern Ireland is one of the iniquities of direct rule. Northern Ireland Members are of the firm opinion that we should have ample time to discuss these matters. I am glad that the Minister took the time tonight to set out important facts about these industries. I hope that it will be possible to find a better way of discussing the financing of these two important industries than on an order such as this. We do not want to hinder Harland and Wolff. We want to help the company and to enable it to continue to enjoy our admiration.

Let it be remembered, above all, that these industries are working under the stress of present economic circumstances and under the stress of terrorism. The work force and management of those businesses which have kept going in the face of terrorism should be congratulated. However, they must proceed to achieve viability and stand on their legs and not be propped up by the Government.

12.50 a.m.

Mr. James Kilfedder (Down, North)

I regret to say that I am participating in what can only be described as a political and parliamentary charade. In the early hours of the morning I have been told that I have two minutes in which to deal with two of the most important industries in Northern Ireland, the shipbuilding and aircraft industries. It is a disgrace that the representatives of the people of Northern Ireland are expected to deal with such important topics in this way. These industries are vital to so many people, particularly in Belfast. We are debating this subject in an almost empty House, with six hon. Members representing Northern Ireland present and a few others to make up weight, one of them waiting to take part in the Adjournment debate.

The hon. Member for Antrim, North (Rev. Ian Paisley) took up the remark of the hon. Member for Newbury (Mr. McNair-Wilson) that there would never be an Assembly in Northern Ireland. I have heard such talk often enough from the right hon. Member for Down, South (Mr. Powell) and his colleagues. They take every opportunity to block the chance to re-create a Stormont Parliament. I believe that we shall have a Stormont Parliament. If I did not so believe I do not think that I could stay much longer in this House. The Ulster people want and need a Stormont Parliament.

I pay tribute to the Minister for his activities in trying to bring industry to Northern Ireland. I have often castigated him in the past and it is right that I should pay tribute to him now. What we need is a Stormont Cabinet actively concerned with the affairs of Northern Ireland, trying to reduce unemployment. I also pay tribute to the shipyard and aircraft workers in Belfast. During the past few years they have striven gallantly to keep these two firms alive and viable. This is in stark contrast to the sordid episode involving Mr. Hoppe, who managed, with the consent of the former Stormont and the then Conservative Government, to secure a cast-iron contract. This enabled him to have his salary paid tax-free to a Swiss bank account. He was also able to claim compensation which has made him richer by about £200,000—paid into a Swiss bank account. Yet the workers, doing a good job and using their skills, have to fight for increases at a time of inflation.

The Minister is looking at me. He is waiting to reply to the debate. In the name of the Ulster people I protest at this restriction on the rights of Ulster representatives to probe and question the Government of the day. The same thing happened to me on the debate on the Appropriation order earlier. My remarks were cut short because the debate had to end at a fixed time. I would not like the Minister or the House to think that, because I have said only a few words, I am not critical of the present direct rule position. I know that the Minister understands this. I would like the House to understand that I am making way for the Minister but I do so under protest.

12.55 a.m.

Mr. Concannon

I accept the protest. I am more worried about the words that have been used about me personally. I do not know whether it is a backhanded way of getting rid of me. I am thinking that I may be short of a job tomorrow if the news gets about.

I shall answer some of the general issues that have been raised in the short time that remains. I hope that I shall be forgiven if I do not refer to hon. Members and identify their constituencies.

As I said in my opening remarks, I could have done what I wished to do for Harland and Wolff merely by extending the order. However, we have taken on board some of the complaints made by hon. Members about scrutiny. By introducing the order we have ensured that there will be more detailed scrutiny. I envisage that we shall have a debate at least once a year on the two companies that have been the subject of the debate. I support that approach.

Mr. Kilfedder

The debates will be how long?

Mr. Concannon

I think that Northern Ireland Members had a fair run on the Appropriation order. There was almost a full day's debate. Some of speeches were extensive even for Northern Ireland Members.

We must remember that the annual reports and accounts of the two companies carry a report from the chairmen. I emphasise that they are joint stock companies. They are subject to the Companies Acts. They are not nationalised corporations in the sense of that term. They are single companies and not conglomerates. They are more the equivalent of Cable and Wireless Ltd. than of nationalised industries. The intention was to bring them under greater scrutiny. It was also the intention to bring them as far as possible within the parent Act as it applies within the rest of the United Kingdom.

I do not want to mention the size of the work force that we require at Harland and Wolff or to talk about phased rundowns. I told the representatives of the work force of Harland and Wolff yesterday that the workers will determine the size of the work force by giving the Secretary of State or myself the scope to seek orders for the yard. The more work that we can get for the yard, the larger the work force that we shall keep employed. I do not envisage a target number of employees. Certainly that will not be the approach at Short Brothers. The idea is to increase the size of the work force as Short Brothers. Much depends on what the Government, the management and the work force can achieve for the yard.

Industrial democracy is sought by the Harland and Wolff work force. It has decided which way it wants to go. There is one stage that has not yet been accepted. I discussed these matters with representatives of the company some time ago as I thought that there might be ways in which help could be given at Government level. I was told by the trade union movement that that was not so and that I had done all that it had asked of me. I was told that it would pick up the remaining stages of industrial democracy when it was ready.

It is not my intention to go to Short Brothers and to say that this, that and the other must be done on the industrial relations front. That would be wrong. These issues cannot be forced. Movement on industrial democracy must come from the work force and the board. The Government do not intend to try to run the companies.

Some hon. Members have referred to liaison with British Shipbuilders and British Aerospace and the rumours that are being spread. The House should remember that if the order is agreed to there will be an extra £60 million going to Short Brothers over a five-year plan, not a three-year plan. That will be a rolling programme for Short Brothers. The company will be returning to the Government and we shall be reconsidering our approach. On that basis it is clear that liaison with British Shipbuilders and British Aerospace is taking place at all levels. That applies at governmental, departmental, trade union and management levels. Bearing in mind the state of the order book and what I have been able to say today, that approach is working in our favour.

All major parties in Northern Ireland still regard a form of devolution for the Province as a major plank. I am seeking to protect the statute book of Northern Ireland for the future when the people of Northern Ireland will decide what to do with the two firms. We all agree that they form a major part of industry in the Province. I am sure that Northern Ireland Members want the statute book protected. If some form of devolved government came along, I am sure that they would not want people on this side of the water to be running the companies or deciding what they should do. That power would be better placed in the hands of the Northern Ireland people and the Executive of Northern Ireland.

I hope that I have covered most of the general issues. If I have not, I am sorry. I shall write to hon. Members as soon as possible to take up the matters that I have omitted in replying to the debate. The order is beneficial not only to the shipyard but—

It being one and a half hours after the commencement of proceedings on the motion, Mr. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted business).

Question agreed to.


That the draft Aircraft and Shipbuilding Industries (Northern Ireland) Order 1979, which was laid before this House on 7 February, be approved.