HC Deb 16 April 1980 vol 982 cc1410-30 12.41 am
The Minister of State, Department of Industry (Mr. Adam Butler)

I beg to Move, That the draft Shipbuilding (Redundancy Payments Scheme) (Great Britain) (Amendment) Order 1980, which was laid before this House on 12 March, be approved. The House knows that the amendment embodied in the draft order is the same as in the Northern Ireland order that the House has just debated. It is both minor and uncontroversial and it received approval in another place on 1 April. I hope that we need not take too much time to consider the details of the order, and I shall be brief in introducing it.

In line with the general redundancy payments scheme, the order raises the so-called previous earnings limit, against which payments under the scheme are calculated, for those whose eligible earnings are at or above that limit.

I think that the House may like me to say something about the present shipbuilding scene as we see it and how it has developed since the last debate that we had on this subject. Those of us who sit up at this time of night are aware of the problems which affect the shipbuilding industry worldwide. I think that for the details of the position as British Shipbuilders and as the Department of Industry see it hon. Members can do no better than look at the evidence submitted to the Select Committee on industry and trade on 27 February this year.

In the middle of last year, when the Government announced their policy for supporting the shipbuilding industry, new orders were at extremely low levels and there were few grounds for optimism. There has since been some improvement in ordering levels. Taking 1979 against 1978, world orders were doubled, but 1978 was the lowest year for new orders since the slump in shipbuilding began. Even the improved levels of orders are well below those needed to sustain total available capacity worldwide.

Clearly, British Shipbuilders must take advantage of the improvement in ordering levels. Other countries are just as anxious for new orders as we are, and competition is and will continue to be fierce. Despite the doubling that I have detailed worldwide, British Shipbuilders' orders for 1979 were only about the same as for 1978. In contrast, Japanese new orders increased by over 50 per cent. and those for the rest of the EEC—excluding the United Kingdom—increased by over 70 per cent. There are some special reasons for that, but those contrasting figures do not present a particularly happy picture for us. Added to that, developing countries are also winning an increasing share of the market.

However, in 1980 British Shipbuilders has won more orders and, as a rough measure of where it stands against its target, it has acheved, or is confident of achieving, about 31 ships out of its 45 ships target. That improvement is to be welcomed, but the market is still very difficult and uncertain. Predictions for ordering levels for the rest of 1980 are not at all easy.

In the tanker market the uncertainties about future oil production and consumption, the current surplus fleet and the relative youth of the fleet will continue to depress new building. Tanker rates have already declined substantially since the end of 1979. On the other hand, freight rates in the non-tanker market have remained fairly steady since the middle of last year. Nevertheless, given the sort of growth rates that we expect for world seaborne trade in the coming years, it is unlikely that 1980 will see any great improvement in demand in this sector, either. Overall, we judge that it will be some time before we see substantial and enduring improvements.

Capacity and demand in the market are still very much out of balance. In British Shipbuilders we see the problems facing all of British industry in consequence of the high level of the petro-pound. For British Shipbuilders there is, additionally, the relationship of the pound to the yen, which has see-sawed strongly to British Shipbuilders' disadvantage over the last year or so. The prices British Shipbuilders can obtain still fall far below costs. It is, therefore, having to rely to a substantial degree upon Government assistance to obtain orders. Frequently this comes to the maximum of the intervention fund aid available. However, the world price level is not the only determining factor. The level of costs is also important and some of the control over that, at least, is in British Shipbuilders' hands.

I stated clearly last July, and have said many times since, that the Government wish to see a viable and flourishing merchant shipbuilding industry. This can be achieved only if the industry obtains greatly improved levels of efficiency and productivity. I have no doubt that management and unions and all those who work in British Shipbuilders are persuaded of the need for this. Progress has been made, but much still needs to be done. That would be difficult enough at any time, but is more so now, when order books are not full. It is vital that progress should be made if the industry is to survive without the continuing blood drip of subsidy. British Shipbuilders deserves the full support and encouragement of the House.

British Shipbuilders' strategy, reached —as the House knows—after full consultations with the unions, is to reduce the size of our merchant shipbuilding activities to a capacity of a little over 400,000 compensated gross registered tonnes, with employment of between 18,000 and 19,000. British Shipbuilders hopes to be able to reach those targets by mid-1980 through a combination of transfers, wastage and voluntary redundancy.

It is with regard to redundancies that this order is immediately relevant. The facts are that since mid-1979 there have been over 3,500 redundancies within merchant shipbuilding and, as part of the recent broadly self-financing wage settlement, a further 3,000 voluntary redundancies are being sought from BS as a whole. Some of these have already arisen in the merchant shipbuilding sector. The inevitable contraction in the industry is well under way, but it has not vet been completed. Thanks to the good sense and understanding of the unions and the way in which they have genuinely co-operated with management in this painful but necessary process, that contraction is proceeding satisfactorily.

Mr. Michael McNair-Wilson (Newbury)

Can my hon. Friend tell us whether the 3,000 redundancies to which he has referred came from any particular area of the country or whether they were spread throughout British shipyards?

Mr. Butler

They have been spread widely over all the yards in British Shipbuilders over the period of contraction of the industry. There have certainly been redundancies on Merseyside, Tyneside, Wearside and in Scotland. I can provide my hon. Friend with the details if he so wishes, but he will find that the spread is general and includes the closing of some yards in addition to the slimming down of others.

Mr. Frank Field (Birkenhead)

Will the Minister confirm what he has already confirmed in correspondence to me, which is that the redundancies have affected Cammell Laird more heavily than other shipyards?

Mr. Butler

The hon. Member for Birkenhead (Mr. Field) will find that that is so. But on analysis one has to consider the whole period of the contraction of the industry over the past two or three years. The hon. Gentleman may well find that recently Scottish yards have been more severely affected. However, I recognise that Cammell Laird has experienced a considerable rundown in the number of workers, with obvious consequences for his constituency.

I conclude by giving the total number of people who have benefited under the shipbuilding payment schemes since their inception. My hon. Friend gave a figure for Northern Ireland and I shall include his figure in the total, which to date is 11,500. Further, more redundancies can be expected as part of the restructuring plan that British Shipbuilders determined last summer, and as part of the agreements in the present wage round. That is one reason why we believe that it is right to increase the previous earnings limit in the way that the order proposes, and I am sure that the House will wish to support it.

12.52 am
Dr. John Cunningham (Whitehaven)

We welcome the improvement in the provisions for redundancy payments, in so far as it is right to give a welcome to any provisions for redundancy, and we shall not oppose the order. However, I should like the Minister to comment on the question that was raised by one of my hon. Friends during the course of the discussion on Northern Ireland, namely, what is the likely impact of this upper limit in terms of the earnings levels in the yards in England, Scotland and Wales? It may well be that earnings levels are significantly higher in those yards than they are in Harland and Wolff. Perhaps the Minister will comment on that when he winds up.

Despite being debated at a late hour, the order gives us an opportunity to discuss the present and future prospects of the industry. I was interested to hear the Minister say that British Shipbuilders deserves the full support of the House. We certainly accord British Shipbuilders our wholehearted support. However, I am not sure that the Minister does. Within the past 24 hours he has said that reasonably soon the Government hope to make changes in the organisation of British Shipbuilders by some form of privatisation. It is well known that unions and management are opposed to this change.

The Minister is asking us to give the industry our full support. He can hardly say that that is reflected in his own position. It would seem that quite the reverse is reflected. He seems to have grounds for wanting to make what we would regard, and what most others outside the House would regard, as unnecessary and precipitate change.

The facts seem to bear out the argument that British Shipbuilders has, in difficult circumstances, made a good and rather effective beginning. The Minister has said that it has reached about two-thirds of its orders target. It has made wide-ranging progress in a number of major areas and with a number of the major problems that faced it from vesting day. Large problems remain, but any balanced judgment would be that it has made a good and effective start.

It owes little thanks to the present Administration. We have not seen much by way of public sector orders since the Government took office. In one classic example, a public sector order went to a foreign yard—namely, the National Environmental Research Council vessel. it was a small order, but of the sort that Hall Russell and Company Limited would have welcomed. We have been given no adequate explanation of why that happened. The same yard has had disappointed over the placing of contracts for offshore patrol vessels for the Royal Navy. It has some orders for those vessels, but not as many as it was led to believe were possible or as many as we believe would have been possible. That has been rather disappointing.

We have seen no progress within the EEC towards a scrap and build policy. Governments have said a great deal in favour of scrap and build but have produced no results. We have witnessed a steel strike which has had a significant impact upon British Shipbuilders. It has reduced perhaps the best merchant shipbuilding yard—Austin & Pickersgill Limited—on the Wear to a three-day week. Major responsibility, if not sole responsibility, for that dispute rests with the present Administration.

On the Minister's own admission we have a sterling rate—again, this is part of Government policy—which is significantly disadvantageous to British Shipbuilders in terms of achieving overseas orders. The Minister is reported in the press today as having said last evening that he wants to make changes. Attitudes in the Government seem not to be based on any consideration of what British Shipbuilders has achieved to date. These matters were discussed only recently in a letter in the same newspaper, the Financial Times, which can hardly be said to be the voice of raving Left-wing Socialism.

The Under-Secretary of State for Industry (Mr. Michael Marshall)

What is it?

Dr. Cunningham

I should say that it is the equivalent of the "village voice" of the City of London. That is what the Financial Times seems to be. Many things were said about Government policy in a widely read and commented upon leader. It stated that it could discern no arguments for making changes in British Shipbuilders other than those based on dogma or on manifesto commitments being given overriding importance for no reason other than that they appeared in the party manifesto.

We appreciate that the Minister of State has worked hard and has visited shipyards and met trade unionists. That is appreciated by the unions especially. They have expressed their gratitude. However, he must have a major responsibility. He must know the feeling in the yards better than any member of the Government. He must know of the attitudes and of the progress that has been made. Unfortunately, he and the Secretary of State have made comments that are having a destabilising effect not only on the management of British Shipbuilders, but on trade union involvement in the changes. They have affected people's attitudes towards those changes, although most agree that they are necessary.

If the Government pursue that course, trade unions will withdraw their co-operation. All too quickly their comments will lead to confrontation in our shipbuilding industry. That is the last thing that we want. The Government seem determined to collide head-on with trade unions to prove a point. However, it cannot be argued that that is in the best interests of British Shipbuilders, merchant shipbuilding or of our naval dockyards. Nor can it be in the wider interests of the many hundreds of thousands of companies and their employees who supply our shipyards.

The Government cannot argue that there is any good reason for getting into such a position, any need to do so. British Shipbuilders has been making progress. It is meeting its financial obligations to the Government and is well on its way with orders. There have been major improvements in its industrial relations. There has been a massive reduction in the number of disputes and the number of man hours lost in the yards. In 1972 nearly 4 million man hours were lost. That figure has consistently gone down, reaching 0.12 million in 1979. The number of disputes has also greatly dropped. No one can say that a major improvement has not been made.

A wage deal of 11 to 12 per cent., self-financing over 18 months, has recently been concluded. One would have thought that Government Members would have given their right arms to have seen that reflected in the economy. However, the attitude expressed in the Minister's speech last night puts those things at risk. To what purpose? There is no real demand for privatisation in terms of selling shares. It will probably be some time before there is a major demand for that. Will the naval yards be hived off back to the owners? They have not yet received any compensation. In many ways they have had to wait longer than when we were in office. At that time they criticised us heavily. Perhaps their assets will be returned to them instead of compensation. That would give the Government a way out as regards public expenditure. However, it would not provide a future for our shipbuilding capability. No one can be in any doubt that our merchant shipbuilding capability would be irreparably damage by such a move.

The Minister should argue for stability in British Shipbuilders. He should not make speeches and comments that create instability. We understand that by means of the Whitehall machine he has gone as far as to book a provisional slot in the legislative programme to introduce a Bill to enact whatever the Government decide.

Such information usually leaks out. What impact does the Minister expect that news to have? No doubt he will say that he is just being prudent and is ensuring that the Department books its place in the Gracious Speech, but it seems to be a clear indication of intent. The Minister has already been told by the Confederation of Shipbuilding and Engineering Unions of the likely result of such a move.

In north-east Scotland, the Clyde, the Tyne, the Wear, the Tees, Merseyside and elsewhere, there has been, if not a revolution, certainly a major and fundamental change in the attitude of the unions and their commitment to this important industry. British Shipbuilders has streamlined many aspects of the industry. There is more co-ordinated and efficient marketing, a free exchange of technology—the commercial barriers have been removed—and the transfer of production resources and even production workers has gone ahead effectively. There is free exchange of research and development effort and a co-ordination of design effort. They are major achievements for the industry and for all the industries that depend on shipbuilding.

We have seen the allocation of ship types to yards with particular expertise, co-ordination in national wage and salary structures—the removal of a massively complex arrangement, reducing between 160 and 170 local bargains to one overall approach. That has been of major benefit to the industry. There is an industry-wide pension scheme, co-ordinated purchasing policy and a career development plan. All those improvements will be jeopardised by the idea that the Minister of State is floating.

The industry has also developed the establishment of best working practices, the co-ordination of training at all levels to ensure proper standards, the adoption of a single clearing bank to reduce overdraft charges and so on, a single point of contact for prospective purchasers, the Government and all the organisations and agencies involved in discussions with the industry, a co-ordinated approach to world exhibitions and trade fairs, and a harmonised accounting system.

Those are all major advantages which have been brought about by having a unified shipbuilding industry. It would be foolish in the extreme for the Government to jeopardise the progress that has been made. It would meet with fundamental, serious and major opposition, not only in the House, but in the industry.

1.9 am

Mr. Ernie Ross (Dundee, West)

As my hon. Friend the Member for White-haven (Dr. Cunningham) said, while we welcome the scheme, one of the problems for those of us who are members Of the trade union movement is that we do not believe in redundancy schemes as such, because we do not accept that one worker has the right to sell a job that he temporarily holds. But we recognise that the problems facing many of our industries require that if there are to be pay-offs a payment should be made to each worker concerned to ensure that at least he can sustain his family and himself while he seeks work. However, with the policies being pursued by the present Government, one would hesitate to hazard a guess at the sums required by those who may be made redundant in the next few years to ensure that they can sustain their family at a reasonable standard of living until they secure employment.

My hon. Friend also referred to the statement made by the Minister last night at the Royal Institution of Naval Architects. Here again, we would point out some of the difficult areas into which the Government's policies are leading this nationalised industry, when they seek to introduce private capital. Our arguments in the debates on the British Aerospace Bill are just as relevant in connection with the shipbuilding industry. Clearly, shipbuilding—and particularly the naval aspects—is a strategic resource.

We hear from the Conservatives about their commitment to the defence of this country. I shudder to think of the interference in our naval contracts that there could be if foreign ownership were allowed to infiltrate into our nationalised industry. Looking at the way in which the Government are trying to de-nationalise British Aerospace, one can only assume that they will use similar plans for the shipbuilding industry, and we cannot have much confidence that those plans will contain safeguards for a strategic resource.

We also wait to hear from the Government when they will pursue a proper scrap-and-build programme. While most of the British fleet is, perhaps, much more competitive and modern than that of many of our overseas competitors, there is still, at the bottom end of the fleet tonnage, great scope for such a programme. Many of those ships would suit the capabilities of the yards that hon. Members on both sides of the House represent.

The benefit would not go only to the shipyards. The country would benefit from the modernisation of our fleet through the saving of energy. Benefits would also go to the Conservatives' friends, the owners of the shipping fleets, through operating much more efficient fleets. We hope that the orders that are given will not be used simply to seek to justify the Government's continued lack of support for the industry, but will assure the workers in the industry that the Government are concerned to ensure that we have a viable industry in the 1980s and the 1990s.

I should like to concentrate on the effects that the order may have in my own area. The Robb Caledon yard in Dundee faces a serious position, which grows more serious as the weeks go on. There is to be a meeting between British Shipbuilders and the shipbuilding negotiating committee tomorrow and on Friday. On Friday they will concentrate on that yard. I hope to be there to speak to British Shipbuilders and the members of the SNC.

I have written to Ministers asking for support for specific areas within the Dundee yard. It is now generally agreed fol- lowing a meeting in February at the yard between British Shipbuilders' executives, the Robb Caledon management and the trade unions, that the yard must diversify, particularly into oil-related industry structures and other non-shipbuilding work, including steel fabrication for both offshore and onshore construction, and ship repair and refit work.

To do that the yard must be capable of responding to those industries. British Shipbuilders are making demands on the Dundee yard to seek work in the oil industry. A basic requirement of that industry is delivery on time. The Minister made great play of the need for prompt delivery. The yard therefore requires the necessary tools and equipment. There is no point in telling an oil company that it cannot have the required service because the facilities in the yard are so antiquated that the time schedules cannot be met or have broken down because of a lack of planned maintenance.

In my letter to the Secretary of State for Scotland on 26 February I said that I was concerned that there was no planned programme of maintenance in the Dundee yard. If the work force is to diversify, that is absolutely crucial. I also asked in that letter for a much wider view to be taken of Dundee, and suggested that, perhaps, a new yard could be built there. However, as we are discussing the redundancy payment scheme, it is more relevant to concentrate on more immediate problems. A new yard for Dundee is a long-term and perhaps uncertain prospect, but in the immediate future we need facilities that can respond to the new situation.

Yarrow Engineering Glasgow Limited, a private company, announced on 8 April that it would be closing down its ship repair yard in Dundee from 9 May 1980, with the loss of 46 jobs. Yarrow's have just completed at Dundee one of the biggest repairs to a vessel in Britain since the Second World War, having almost rebuilt a vessel that was previously named "Smitt Lloyd" and renamed "Muhammed Ali". It was an astounding technical achievement. Perhaps that is why it was given that name.

That company has expert knowledge of the ship repairing sector. In announcing the closure, the chairman made it clear that it was impossible to operate a ship repairing industry in Dundee with the existing facilities. He instanced the lack of suitable cranage facilities and the very limited dry dock facilities. The company made it clear that considerable upgrading and modernisation of harbour facilities are necessary if Dundee is to compete effectively with other ship repairing areas. Those are the very same comments that I was making.

On 17 March the Under-Secretary of State for Scotland with responsibility for industry and education indicated that, if there was to be diversification, the Government might give Dundee sympathetic consideration. The chairman of Yarrow Engineering Glasgow Limited has expert knowledge of ship repairing, and the Government must take his comments seriously if they are concerned to support the shipbuilding industry, particularly in Dundee. The time is ripe for the Government to make a special case of Dundee.

Within the Dundee yard we have a highly skilled work force, capable of building ships at the very edge of technology. It has proved that in the past with the cable-laying ship built for the Post Office. The yard provides apprenticeships and training for about 100 young people in Dundee, who will contribute not only to the industry, but assist manufacturing in Dundee to remain competitive.

It is for those reasons that I believe that the time is right for the Government to come into Dundee and to give some special aid to the Dundee port authority to build a synchro-lift facility within the Dundee harbour. It is vitally important that that synchro-lift should be built and the money provided to allow the port authority to build it.

One of the problems of representing an area which has special development area status is that when the economy in that area—

Mr. Deputy Speaker (Mr. Bryant God-man Irvine)

I have allowed a great deal of latitude to the Front Benches and I have tried to exercise the same restraint in relation to the hon. Gentleman, but I remind him that we are discussing whether £120 is to be the limit.

Mr. Ross

I accept your point, Mr. Deputy Speaker, but the £120 is money that the workers in Dundee would rather the Government kept. While agreeing that the figure should be increased, I think that it is quite fair, within the debate, to suggest to the Government ways in which they could avoid having to pay this money, whether they increase it or not. A number of people in Dundee are concerned to suggest to the Government other ways in which—even if the Government increase the money—such sums could be spent. It could be used, possibly, for other more urgent requirements.

The special development area status is an acceptance by the Government that the area concerned has special problems. One of the reasons why the Government are now seeking to increase the redundancy limit in regard to the shipbuilding is obviously to take account of that aspect. What we find in the special development areas is that when we run into problems we attract people whose backgrounds are slightly spurious, to say the least. Today we have had someone who suggested that he would like some Government money to build a synchro-lift in Dundee. I would not agree that he is a person who should be given any help in this regard, because in the same breath in which he asked for Government assistance he admitted that he has no experience in the shipbuilding or ship repairing industry. Yet he suggests that he knows the answers in regard to the ship repairing concerns in Dundee.

The people in Dundee are not asking that they be allowed to take advantage of this increase in the redundancy payments scheme. The workers and the management in Dundee are asking the Government to come in and give some assistance, so that that money can be used to help British Shipbuilders ensure that there will be a British shipbuilding unit within the Dundee area in the 1980s.

1.23 am
Mr. Frank Field (Birkenhead)

I hope that my brevity will be matched, Mr. Deputy Speaker, by your generosity should I stray just slightly beyond the order that we are discussing this evening. It is a year since we had a similar debate, and I think it worth while to spend a couple of minutes reflecting on what has happened within that period.

The last 12 months have witnessed a continuing decline in shipbuilding. Much of the 1970s has seen a fall in the numbers working in the industry. While the rest of the world was expanding in terms of shipbuilding capacity in the early part of the 1970s, the British shipbuilding industry did not respond in a similar way. The latter part of the 1970s has been marked by a continual decline in the numbers employed in British shipbuilding and the support industries. That decline has continued over the past year.

A marked decline in the numbers working in the industry has also been matched by a drop in the restrictive practices. Hon. Members would be hard put to think of another industry which has suffered the contraction that the shipbuilding industry has suffered, and which has matched that contraction with a disbandment of restrictive practices, at a time when unemployment generally in the economy has been rising. That is a sign that the men wish the industry to survive.

If that is not enough to show their good faith and their wish to make the industry a success, one has only to examine the recent pay agreement to which my hon. Friend the Member for Whitehaven (Dr. Cunningham) referred. We would have to search hard to find other industries which have reached agreement on productivity increases leading to a real increase in standards of living for the work force. The most recent issue of Incomes Data Services' report stated: Credit for the comparatively smooth conclusion to this year's negotiations must certainly go to the industry's good industrial relations, which show a marked improvement since nationalisation. That has been achieved peacefully. We must ask "Why?" The answer is simple. There is agreement in the industry for implementing the corporate plan. That plan rests on two assumptions. We are debating one of the assumptions.

One assumption is that there should be a further contraction in the size of the industry in terms of employees. The second assumption is that the contraction should be mitigated to some extent by a shift from work on merchant shipbuilding to completing orders from the Royal Navy. My hon. Friend the Member for Whitehaven commented on the lack of orders which have materialised from the public sector.

I am anxious about the orders which Cammell Laird hopes to achieve. We are particularly interested in the two support tankers. A recent letter from the Minister of State, Ministry of Defence caused particular anxiety. It stated: The shipbuilders' tenders have now been evaluated and, in the light of that evaluation, it has been decided to review the Royal Navy's support tanker requirement in order to determine whether it can be met more cost-effectively. The review is in hand, but since it has not yet been completed, it has been decided to allow the current tenders to lapse. There is a possibility of further redundancies, not just at Cammell Laird but at many other shipyards. That makes the order that we are debating even more important.

A key question relates to the corporate plan, agreed and approved by the Government a year ago. The Government gave it their blessing. The plan comprised two parts. It attempted to win a sizeable number of merchant shipbuilding orders and to bring orders from the public sector. What has happened to those orders? Did the Government agree to the plan when they came into office? Did they agree to both parts when underwriting the financial future for the industry over two years? If so, what has changed their minds about the Navy orders?

A year ago the Minister rightly made great play about the fact that he was in favour of the scrap-and-build programme. He said that he was one of the EEC Minister most in favour of it. What news has he to report on that front? It is not only important in gaining merchant shipbuilding orders. If there is to be a contraction of the orders that we hope to receive from the Navy, scrap-and-build takes on an even greater importance.

Will the Minister be a little more forth-coming than the newspapers have been about his speech yesterday? What are the plans for what will be the phrase for the 1980s, namely "privatisation of the yards"? Will it be only the Navy yards, or do the Government have plans for the mixed yards? My correspondence with the Minister concerned the loss of shipbuilding jobs in Cammell Laird both well before and after nationalisation. In the period up to nationalisation we suffered more than our fair share of job losses compared to the average job losses over the country. Since nationalisation, Cammell Laird has once again borne more than its fair share of job losses over the past couple of years.

There is an unemployment rate of 11 per cent. in Birkenhead as a whole, with about 280 vacancies and 7,500 unemployed. In the river streets around Cammell Laird unemployment is reaching 30 per cent. When we debated the matter a year ago the Minister said that Cammell Laird had a bright future. What hope does he hold out tonight? What has happened to the corporate plan, especially the Navy orders which were a crucial part of fulfilling the target of a peaceful rundown of the shipbuilding industry to a lower level of production? What does he have to report on scrapand-build? What are the plans to introduce private shareholding into the yards, and how extensive will that be?

The answers to those questions will, in part, determine how important is the order that we are debating tonight, and how many of our constituents will be dependent upon it in the coming year.

1.33 am
Mr. Adam Butler

I shall attempt to answer points that have been raised during the debate, but briefly as you, Mr. Deputy Speaker, have guided us on this matter.

It would be appropriate to deal with the one specific point in regard to the order itself, the raising of the limit, to which the hon. Member for Whitehaven (Dr. Cunningham) referred. He asked a specific question about its impact. My information is that raising the limit could affect about 1 or 2 per cent. of the beneficiaries. The average wage in British Shipbuilders for manual workers is about £90 to £100. Therefore, the figure of £120 is, generally speaking, above that level.

Having asked that introductory question, the hon. Gentleman launched into, not a powerful attack on the Government, but an accusation that we were lacking in our support for British Shipbuilders. I reject that as a totally unfair and unjustified charge. He knows of the massive package of aid which I announced to the House in July of last yeas—aid that was put behind British Shipbuilders in a considerable number of ways. That aid has been made available, and we have given full support to British Shipbuilders over a difficult time.

There are three areas with which I should deal in some detail. The hon. Member for Dundee, West (Mr. Ross) referred to the problems of Robb Caledon. I am well aware of them. I am aware that British Shipbuilders will be meeting the shipbuilding negotiating committee in the course of the next day or two. I am informed that Robb Caledon is one of the yards that will be discussed.

There have been special understandings in regard to that yard between the management and the unions, and it has been given an opportunity to find orders. My understanding is that those orders have not been forthcoming. Therefore, consideration must be given to what the next step should be. The hon. Gentleman asked whether the Government could do anything to help. Decisions in regard to the yard must be a matter for British Shipbuilders. As for aid being available for other matters, the hon. Gentleman referred to the special development area status of his constituency. That in itself is an attraction for any inward investment.

Mr. Ernie Ross

Although we are vitally concerned about the future of Robb Caledon within British Shipbuilders, there are other ship repairing and oil-related facilities in Dundee, namely, Kestrel Engineering, Peterhead Engineering, and, until 9 May, Yarrow Shiprepairing, which could also benefit from Government assistance. Therefore the question goes wider just than assistance for Robb Caledon. We require assistance if Dundee is to participate in the ship repairing industry generally.

Mr. Butler

The hon. Gentleman must forgive me if I do not pursue his point about the new yards that he mentioned. I know that there are problems, but we are talking about a redundancy payments order which affects the yards of British Shipbuilders, and in that respect Robb Caledon is relevant.

On scrap-and-build, I confirm that I have been as strong as anybody in my support within the Council of Ministers for such a scheme. However, the House knows that within the Community there must be agreement between Ministers in order to proceed. Such agreement has not been established. At present I can report only that the proposals are back with the Commission and are bogged down by the lack of agreement. Certainly, from time to time, I see whether anything can be done by our people to make progress, but I have no great confidence at this moment in a scheme coming forward. I repeat, the benefits from such a scheme would be small. However, if such a scheme were to produce a few orders that would be welcome. I have not given up hope, but I have to be frank about the situation.

I was asked about the position on public sector orders. It is fair comment that there have not, perhaps, been the public sector orders that a number of hon. Members would have expected. Whereas one can bring orders forward, one cannot expect the Ministry of Defence to place speculative orders for unwanted ships. I hope that more orders will be forthcoming. Turning to the vessels which were referred to by the hon. Member for Birkenhead (Mr. Field)—the two support tankers—I gather that this review is taking place. The fact that it is taking place indicates that orders may be forthcoming, but that is something for which he and I must wait.

The hon. Member for Whitehaven referred to the "Frederick Russell". That was a straightforward case of an order being put out to tender. Regrettably, other non-British yards were able to meet the requirements of a customer at a significantly cheaper price.

Mr. Field

I should like to press the Minister a little further on that point. It has been represented to the House that it is unreasonable to expect the Government to rustle up a few public sector orders, and perhaps that is so. However, when the Minister announced a major package for the shipbuilding industry, and the level of support that the Government were to provide, we were told that the plan was in two parts—what was expected from the merchant shipping side, and what was expected from British Shipbuilders on navy orders. Therefore, I assumed that, before the level of financial support was commended by the Government, they had looked carefully at the two parts of the plan and had paid particular attention to the public sector orders—the navy orders. I should be grateful if the Minister will confirm that at that stage the Government underwrote that side of the programme, and said that they thought it was feasible for that number of ships to be included in the plan.

We now find that those ships are not forthcoming from the public sector. Hence the real urgency of this order, because we now expect redundancies to be at a greater level than was originally envisaged. Is it not the case that the Government have shifted their position on public sector orders?

Mr. Butler

There is no question of the Government shifting their position. Public sector orders can emanate from two sources. There have been orders from the Ministry of Defence, and I am confident that orders will continue. On the other side of the public sector, the number of ships that are possible in total tonnage is small. We have tried to find out whether those orders could be accelerated. I do not think that that position should be exaggerated.

The production of naval ships is part of the overall plan, although I remind the hon. Member for Birkenhead that the option 2 plan—as it came to be known—of British Shipbuilders referred specifically to merchant shipbuilding. Again, I remind the hon. Gentleman that in July we said that we supported the plan, but we made it clear that we felt that the targets would be difficult to achieve. Tonight I have reminded the House of the position since last summer, and I have given an indication of the order book with regard to merchant shipping. British Shipbuilders is making a brave and strenuous effort to reach its targets. We must hope that orders are forthcoming on the merchant shipping side.

I did not raise the subject, but I am reminded that I made a speech last night—

Dr. John Cunningham

Before the Minister moves to another point, may I say that it is not good enough for him to gloss over the question of public sector orders? There is no doubt that a year ago, when the Minister made his major announcement about British Shipbuilders, there seemed to most people—certainly those in the industry—to be a commitment from the Government on public sector orders. The record since then has been less than the apparent commitment. Military orders have not been as forth-coming as people were led to believe, and one—albeit small—non-military British public sector ship is now being built in a Belgian yard. The Minister of State says that that is because the Belgian yard was able to build it more cheaply. That may be so, but only because of a significant subsidy from the Belgian Government. It is not good enough, and we shall not allow the Minister to skate over this record as smoothly as he has tried to do. The record of the Government in this respect is bad. It could be better. It is in the interests of everyone—not least the Government—that it should be better. Would it not be a tragedy if the predicted upturn in shipbuilding orders came too late because of the Government's failure to sustain existing capacity in British yards?

Mr. Butler

I must correct the hon. Gentleman in one respect. It is totally untrue to say that the Belgian yard which gained the order for the "Frederick Russell" was subsidised. Belgian shipyards are not subsidised.

I am not attempting to gloss over this at all. I said to the House very frankly in answer to questions, when the policy was announced and subsequently in other debates, that we would bring forward public sector orders where we could. But there must be a degree of realism in all these things, and it is realism which the Government have practised. We are not prepared to fabricate orders especially for this or that purpose. As I have said, there have been naval orders and there will continue to be naval orders. I make my representations to my colleagues in the Ministry of Defence in regard to such orders. But it is not my intention, and certainly they would not respond, to have orders fabricated or brought forward unrealistically. That the hon. Gentleman must accept.

I was about to refer to the speech which I made last night. It was picked up in one newspaper, and I am glad, because it allows me to put it in context. I was making reference to the constraints which managements in the public sector experience. Indeed, there were exchanges in the House today on that subject. I was pointing out that that was one of the difficulties which accompanied the public sector and made the job of running public sector businesses more difficult. Consequently, the success of the business itself is less good. I pointed out that managements' energies, at least in part, had to be used to deal with the political dimension. I also said that, with regard to the public sector, there was no guarantee of job security. I did not elaborate on the point, but I need say no more, because the evidence is that in the public sector today there is no such thing as job security. Regretfully, it is an area where redundancies are greater than anywhere else.

The Government are considering the introduction of private sector capital into the industry. I have made no secret of it in my meetings and discussions with the unions, whether at national level or in the yards. But we shall introduce private sector capital into British Shipbuilders at the appropriate time only if it is in the best interests of the industry. We believe that the private sector is, generally, better for industry than the public sector and, therefore, for those who work in that industry. It would be for that purpose, and not for any reasons of political dogma, that we would go ahead with plans for British Shipbuilders. However, no decisions have been made, and we shall make announcements at the appropriate time.

It is because we have a high regard for British shipbuilding that we have given the industry our support since we came into power. The order we are debating, while important to those few people who will be covered by it, is a small part, and evidence, of that support. Once again, I commend it to the House.

Question put and agreed to.

Resolved, That the draft Shipbuilding (Redundancy Payments Scheme) (Great Britain) (Amendment) Order 1980, which was laid before this House on 12 March, be approved.