HC Deb 03 December 1980 vol 995 cc351-77 10.14 pm
The Minister of State, Department of Industry (Mr. Adam Butler)

I beg to move, That this House takes note of European Community Document No. 9866/80 and supports the Government in its efforts to ensure the continuation of an agreed framework within which temporary aid, in the light of the present crisis, may be provided to the Community Shipbuilding Industry.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

Mr. Speaker has selected the official Opposition's amendment.

Mr. Butler

As this is the first occasion for some years on which the House has had the opportunity to discuss the shipbuilding industry in a Community context, it may be of assistance if I set out the background to the draft directive before dealing with its detailed provisions.

In my statement of 13 November on British Shipbuilders' finances, I made it clear that the Government accept that subsidies will for the moment continue to be necessary to enable British Shipbuilders to obtain merchant ship orders during the continuing crisis in the world shipbuilding industry and that in line with other OECD countries the Government consider that shipbuilding subsidies world-wide should be progressively reduced. I also made it clear that the Government are, however, prepared to continue to support with taxpayers' money British Shipbuilders' efforts to achieve viability. Those considerations, which of course apply to the United Kingdom shipbuilding industry as a whole, have been taken into account during the preparatory stages of the draft directive and are reflected in the motion before the House.

There has been little change in the prospects for merchant shipbuilding and shiprepair during the past few months. Although the United Kingdom percentage of OECD merchant ship orders increased during the first half of the year, and, indeed, the orders for British Shipbuilders in compensated tons is above the level of orders achieved in 1978 and 1979, that momentum has not been maintained. Reports from various quarters confirm that the position on orders still remains uncertain.

Mr. Robert Hughes (Aberdeen, North)

Does the Minister accept that the gravest uncertainty over orders stems from the way in which the Government are delaying orders that are in their hands? Will he bring those orders forward, which would greatly help shipyards throughout the country?

Mr. Butler

I take note of what the hon. Gentleman says. On the public sector side, there is a limited number of non-naval orders under consideration over some months ahead. Defence orders are not the responsibility of my Department.

The recession that is affecting all industrialised countries continues to affect demand for ships, and a general upturn in orders still appears to be some way off.

I said in my statement of 13 November that there were new opportunities for British Shipbuilders in offshore work if the corporation could prove itself competitive. There was a great deal of interest in the subject of the BP order for a semi-submersible drilling rig on that occasion. I am glad to say that British Shipbuilders has obtained that order, which is a notable success, in the face of strong international competition. I hope that the corporation will build on that success.

I should also report to the House that since my statement of 13 November the external financing limits for the nationalised industries for 1981–82 have been announced. The limit for British Shipbuilders of £150 million, compared with £185 million for the current year, now completes the package of Government backing for British Shipbuilders' efforts to achieve viability. A full announcement about Government policy towards Harland and Wolff, including funding for the current financial year, was made on 1 July 1980. My right hon. Friend the Secretary of State for Northern Ireland will make a statement in due course about plans for 1981–82 onwards.

Many of our discussions in the House seem to be about the public sector. It is to that area that the greatest part of our aid goes, with the exception of intervention fund money, which is available to the private sector as well. We must not lose sight of the fact that there is still a private sector shipbuilding industry, which cannot look to the Government to finance its losses. There is also a substantial private sector ship repair industry, which receives no subsidy at all. The private sector no less than the public sector has had to cope with the problems of low demand. The fact that they have done and continue to do so underlines the need for British Shipbuilders to secure the substantial and rapid economies and improvements in productivity to which I referred in my last statement.

I turn now to the draft fifth directive which the Scrutiny Committee recommended for debate. The Government were ready to respond to the request for such a debate. On the previous occasion when the fourth directive was recommended for debate, the then Labour Administration were not able to find the time for it.

The fifth directive, in its draft form, is the latest in a series of directives designed to provide a mutually agreed framework for controlling the subsidies paid by member States to their shipbuilding industries. In this respect, the draft directive is concerned to ensure that there should be fair competition between member States.

The draft directive, like its predecessors, also takes account of the general desire of the OECD shipbuilding countries in dealing with the current shipbuilding crisis to avoid a credit and subsidy race. I hope that that objective—the avoidance of a credit and subsidy race—meets with general approval. Subsidy races benefit no one except those with the deepest pockets or with money to burn. Generally, a country ends up getting exactly the same share of orders as it would have done before, but at greater expense to the taxpayer.

The current fourth directive expires at the end of this year. It included for the first time provision for production subsidies designed to deal with the effects of the shipbuilding crisis, especially the problems caused by competition from lower-cost countries, particularly in the Far East, but in other respects its coverage was limited. Experience of its operation has indicated the need for a more comprehensive coverage. Since all the shipbuilding industries of the Community are subsidised by one means or another, cither directly or indirectly by aids to shipowners, it is clearly desirable that the scope of the new directive should be as wide as possible.

Therefore, the new directive, with slight modifications, preserves the main features of the fourth directive which were accepted by the Labour Administration in 1978. In addition, it has two new provisions—one dealing with aid in the form of financing measures and the other extending scrutiny over aids to shipowners.

The main articles of the draft directive are articles 6, 8 and 9, which I shall describe briefly.

Article 6 deals with production aid intended to deal with the effects of the current crisis and repeats, with minor modifications, the provisions of the fourth directive. Crisis aid is permitted under this article only if it is linked to restructuring objectives designed to make the industry viable and provided that the aid is temporary and progressively reduced. These criteria, as I have made clear, are the same as those in the fourth directive, are fully in line with Government policy and, I repeat, were accepted by the previous Labour Administration. Therefore, one questions why the amendment has been tabled.

Article 8 brings aid to shipowners under closer scrutiny than was provided for under the fourth directive. This is a development which we support. It is clear that aids to national shipowners are in some cases acting as aids to shipbuilding. In comparing the levels of subsidy paid to shipbuilding in the United Kingdom and in various EEC countries, we have made clear our view that all forms of subsidy must be taken into account. The House knows the number of times that we have tried to compare the levels of subsidy between various Community countries. Confusion has arisen largely because of the aid which some of those countries give to their shipowners. Therefore, it is right that we should try to bring all these forms of aid together. That is what article 8 effectively does.

Mr. Gordon Wilson (Dundee, East)

The Minister deferred to the difficulty and confusion caused in determining what level of aid applies in the different Community countries. Does he accept that if we enforce the conditions of the fourth and fifth directives our shipbuilding industry may find itself at the lower level of subsidy because it has not been possible properly to determine the level of subsidy, which may be higher, in other countries? If so, what action do the Government have in mind to deal with the situation?

Mr. Butler

I think that the hon. Gentleman is not quite understanding what is behind article 8. It has exactly the purpose of bringing in, under the Commission scheme, aids which are at present given to shipowners, as in the case of Belgium. These at the moment do not fall under the fourth directive, and so it is impossible to compare or attempt to control the levels of subsidy unless aids to shipowners are also included. I accept the hon. Gentleman's point that one cannot get exactly the right amount of subsidy. Indeed, the levels of intervention fund which are on offer from different Governments vary from one country to the other, so that there is not an exact level at the moment. The point of the past directives and of this directive is to try to ensure that, as far as possible within the Community, competition operates.

Article 9 is completely new and covers aid which may be present in the form of financing measures. This article applies to both private and public sector industries and in principle to any form of financing measures. It applies, however, only when subsidies are present in the financing measures and thus does not prejudge any of the particular cases falling under this article. Nor does it discriminate against public sector industries. The financing by the Government of the losses of British Shipbuilders and Harland and Wolff falls within the scope of this article, but I do not foresee any difficulties as a result of that.

Article 5 of the draft directive provides for co-operation between the Commission and member States in dealing with the consequences of restructuring. This relates to the possibility of action being taken under either the European regional development fund or the social fund, but it does not create any new source of funds. Action has already been taken under the regional fund and about £9 million has been allocated to the United Kingdom under the non-quota section for the encouragement of small and medium-sized firms in areas affected by shipbuilding closures.

With regard to the social fund, assistance can already be provided for some types of schemes for workers from the shipbuilding industry. This year, an allocation of £7.5 million has been made from the fund to British Shipbuilders for a two-year training and transfer programme for employees forced to change jobs within the industry because of reorganisation and yard closures. British Shipbuilders has just received the first instalment of £1.8 million.

More recently, the Commission put forward proposals for a special scheme to provide assistance from the fund for workers leaving the shipbuilding industry. The Scrutiny Committee has recommended that this be added to the agenda for tonight's debate.

The Commission's proposal is a modest one. It provides assistance for schemes to encourage the early retirement of those aged 55 and over. It would run on an experimental basis for two years and would cover only 2,000 to 3,000 people across the Community as a whole. A scheme of this sort would, however, be a novel departure for the social fund, which has previously concentrated on training and, to a lesser extent, job creation.

The Government welcome the Commission's attitude towards the acute social and employment problems which arise from the reorganisation of the shipbuilding industry. The United Kingdom already has special schemes to assist redundant shipbuilding workers. As the House knows, I recently announced the Government's intention to renew them for a further two years. The necessary provisions for that renewal for two years are included in the Industry Bill, which secured its Second Reading on Monday.

Mr. Dick Douglas (Dunfermline)

What estimates does the Minister have of the flows coming to the United Kingdom under the scheme?

Mr. Butler

At the moment, I am doubtful whether there will be any flows at all. The amount of money set aside for the scheme is very small, of the order of 3 million or 5 million units of account. But, since it is opposed by the majority of member States at present, I cannot be optimistic of money being forthcoming. At the meeting of the Council of Ministers on labour and social affairs last Thursday, my right hon. Friend the Secretary of State for Employment indicated the Government's support for a specific social fund scheme for the industry, but because of the reservations from other member States the matter has been referred back for further consideration.

The remaining articles of the directive are of lesser importance, or cover procedural matters, and do no more than continue provisions which have been in force for at least the last three years under the fourth and earlier directives.

The Government consider that the draft fifth directive constitutes an acceptable framework for the continuation of subsidies to the Community shipbuilding industry. We see the necessity for a degree of subsidy in current market conditions, but we also welcome the requirement in the directive that the level of subsidy should be progressively reduced. It is on that point that the Opposition, in their amendment, seem to disagree, despite their original support for the fourth directive.

There can be no doubt of our wish to see a viable merchant shipbuilding industry, and I know that there is general agreement on that point. What lies behind the Opposition's amendment is the belief that, come what may, the industry should be kept in business by the injection of public money. I do not want to see any further contraction of the industry, but I am realist enough to know that yards cannot be kept open without orders and that costs can be kept to a minimum only if capacity is fully utilised, if overmanning and restrictive practices are cut out and if the business is run at peak efficiency. Viability cannot be brought about by the use of permanent subsidies. I believe that the offer of permanent subsidy can delay the attainment of viability.

Viability in our shipbuilding industry will be achieved by the efforts of those in the industry to ensure that they build ships at competitive prices on time and to meet the needs of the market. That is the realism that is behind the Government's policy. I suggest to Opposition Members that it is no good putting in money in the way that seems to be implied in the amendment in order to keep yards open when there are no orders for them. If that is done, money is probably being taken from other profitable businesses and other jobs are unnecessarily being put at risk. Labour Members must consider that.

Mr. Robert Hughes

Surely, the Minister has enough knowledge of the shipbuilding industry to know that the shipyards have done most to improve industrial relations and productivity and to build ships at competitive prices, and they are in serious trouble today because of lack of orders.

Mr. Butler

At the moment the order book of British Shipbuilders is comparatively full, but I am worried because, since the first half of this year, orders have slackened off in the way that I indicated to the House. But I am glad to say that the book is looking healthier now than it has done for some time.

The hon. Member for Aberdeen, North (Mr. Hughes) refers to the improvements in industrial relations, to which I have frequently paid tribute, but from my visits to the yards and from my discussions with the unions I know that they recognise that there is great scope for increases in productivity and that they are trying to work towards that end. But, at this moment, that productivity is not high enough and the efficiency of our yards is not high enough. Viability will not be created by the injection of taxpayers' money. It will come through the efforts of those in the industry. At the moment, it is the Government's policy to put money behind such efforts because of the temporarily weak market. But we cannot—I shall say this repeatedly in the House—ignore the fact that the money must come at the expense of someone else.

We have only a limited time for the debate. Discussion on the draft directive will take place at the next Council of Ministers meeting. I am hopeful of agreement within the framework of the directive as presently drafted. I believe that it will continue to provide the support temporarily necessary for British Shipbuilders, and I therefore commend it and the motion to the House.

10.35 pm
Mr. Bruce Millan (Glasgow, Craigton)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: believes that any further reduction in shipbuilding capacity in the United Kingdom would be unacceptable, and urges the Government not to accept draft Instrument 9866/80 in its present form but to obtain the necessary changes to ensure that aid may be provided at levels sufficient to maintain a viable United Kingdom shipbuilding industry.

Before dealing with the main document, I turn briefly to document 9198/80, which deals with the use of the social fund for helping redundant shipbuilding workers. I welcome the document so far as it goes, but it does not go very far. It is extremely modest. Even if the proposal is agreed, and it seems highly doubtful that it will be, the number of people concerned throughout the Community will be very small—2,000 or 3,000—and the money spent over a couple of years would be about £5 million. The amount that will come to the United Kingdom in those circumstances, therefore, is, in terms of our problems, negligible.

However, I appreciate that the Government are supporting the proposal, and no doubt if it is accepted something less modest may develop later. We support the Government in this matter, and we hope that they will be able to secure a satisfactory solution.

My main objection to the principal document is that, while the position has changed considerably since 1978, the directive is still written in terms that suggest that the problem for our industry is one of restructuring, which is simply a euphemism for running it down even further. I strongly believe that we have run the industry down far enough and that we should not run it down any further. If anything, we have run it down too far, but certainly it is no longer sensible for the United Kingdom or a number of other European shipbuilding countries to talk in terms of further restructuring when that means a further rundown.

The Minister of State told us in his statement on 13 November that since British Shipbuilders was established the total employed in it has fallen from 38,000 to fewer than 18,000. We are now down to the core yards, the basic yards that we must maintain if we are to have a shipbuilding industry of any worth.

Contrary to what the Minister of State said this evening, I do not believe that a further rundown will make the industry in Britain more competitive. The problem it faces is one of orders and of financial support, but running it down even further will not make it easier for it to get orders or to compete in the current market, particularly against some of its most important competitors in the Far East, specifically Japan.

Mr. Adam Butler

I know that the right hon. Gentleman would not want to misrepresent what I said. It is not Government policy to run down the British merchant shipbuilding industry. I was making some remarks which were pointing to the reality of life, which is that, if one cannot get orders, contraction must take place But it is not the policy of tie present Government to run down the industry. Decisions about the size of the industry are made by British Shipbuilders in the context of the market.

Mr. Millan

Yes, but the Minister is assuming that the Government have nothing to do with the number of orders that go to British Shipbuilders. That is a proposition which I simply do not accept. I shall come to that matter shortly.

On the question of competitiveness, the Minister referred to the necessity to improve productivity. I do not disagree with him on a number of these matters. But he might have acknowledged the tremendous co-operation that there has already been within British Shipbuilders on the part of the trade unions, something which was acknowledged by the new chairman of British Shipbuilders in his latest annual report.

However, the fact is that with an industry which is running down and is struggling for orders in a difficult market situation it is very difficult indeed to get the necessary improvements in productivity. If the industry continues to go down, if its orders and its capacity continue to go down, I do not believe that we shall get an improvement in productivity. If we are to get the necessary improvement in productivity, it will be only if we can either expand the. industry from its present base or at least maintain it at its present level and prevent a further drift downwards, and such a drift is exactly what is now happening.

The question that the House and the Government must ask themselves is whether we want a viable shipbuilding industry. It is a question which the Community has to ask, as well as the United Kingdom. If we want a viable industry, we must do certain things to obtain that. I do not believe that this draft instrument matches the needs of the situation. In terms of the philosophy of the instrument, it does not give a clear answer. So far as it gives an answer at all, it is an answer which would lead inevitably to further reductions in our shipbuilding capacity.

Before coming to the key questions of orders and assistance, I make another point. The Minister mentioned article 9 and said that he did not believe that that held out any dangers for British Shipbuilders. I am a good deal more worried about article 9 and the effect it might have on the arrangements that the Government have for meeting the losses of British Shipbuilders than the Minister appears to be. I hope that the Minister will give more information about that. Despite what he has said, I believe that article 9 could be and might in fact be used discriminatingly against Britain and, in particular, against British Shipbuilders, and that would make the prospects of success for British Shipbuilders even more difficult than they are now.

The key questions are those of getting our share of the orders which are available in the world and what Government assistance is provided towards that end. These two matters are interlinked. I do not believe that the levels of Government assistance which the Minister announced on 13 November and, in particular, the reduction of the intervention fund to £45 million in the year from July 1981 to July 1982, taken along with the fact that that fund provides a maximum subsidy of only 25 per cent. now compared with the 30 per cent. prior to 1979, will enable us to get sufficient orders to keep British Shipbuilders at its present level of capacity. The financial limits are now inadequate both in total and in terms of percentage aid.

When one takes account of that and the other elements of Government inaction concerning orders, one is extremely worried about the state of the industry.

Taking the order position first, the hon. Member for Eastleigh (Sir D. Price) got the figures the other day for orders placed with OECD countries in the three half-years to June 1980. Between January and June 1980, the United Kingdom showed a certain improvement, but that improvement has now largely been lost, as the Minister acknowledged, because over the last few months very few orders have come to British Shipbuilders.

The startling feature of the table which appears in written answers of 27 October is what has happened to Japan, as a member of OECD, and the improvement in orders which took place in the half-year July to December 1979. Taking the whole OECD, in the first half-year of this year the total orders were virtually the same—in fact, they were down from 5.9 million tons to 5.7 million tons. But during the same period, the half-year from December 1979 to June 1980, Japanese orders went up from 3 million tons to 3.7 million, so that in what has been a good period by comparison with recent years for world orders the rest of OECD went down very substantially.

In effect, when there was a slight upturn in world orders, more than the whole of it went to the Japanese among the OECD countries, and when one takes account of Korea and the rest the position is even worse.

The orders have deteriorated since then, and there is no doubt that unless action is taken—in some respects, it has to be taken on an EEC basis—about Japan and unless we get some reduction in Japanese capacity, bearing in mind that the Japanese have not fulfilled their OECD requirements, to the extent that there are orders in the world at all they will go to shipyards in Japan and Korea, and the Common Market as a whole and the United Kingdom will not have sufficient orders to maintain the industry at even the very much reduced levels that we have at present.

Yet there is no real sign that either the United Kingdom or the EEC is doing anything about Japanese shipbuilding. Very belatedly, the EEC is now doing something about Japanese cars, but nothing is being done about Japanese shipbuilding. The chairman of British Shipbuilders pointed out in his statement on the last annual report: Despite earlier forecasts by the Japanese Shipping and Shipbuilding Rationalisation Council that Japanese shipbuilders would reduce output from 8.1 million tons in 1976 to 2.7 million tons in 1979, actual output in 1979 was 4.9 million tons"— nearly double what it was intended to be. If we allow this to continue, there is very little prospect of any viable future for British Shipbuilders. Therefore, we must ask the Government to take action, and in this context it has to be taken along with our partners in the EEC. I might add that the present value of sterling compared with the yen, and how it has moved over the past two years or so, makes it virtually impossible for Britain to compete for many of the available orders.

I pass to one or two other matters. First, the position on public sector ordering is very unsatisfactory, and I hope that the Minister will say more about it. I hope that he will also tell the House about naval ordering. The Government's defence procurement policy is in a mess at the moment. This Government came in pledged to spend more on defence, but in terms of naval orders for British shipyards the position is a good deal worse than it has been for many years. When the Minister made his statement on 13 November, he said that the future naval programme was still under consideration. We are to have a Trident programme which is costing several billion pounds, but we have not enough money to put a number of ships into our own shipyards. I am not in favour of increasing the defence programme, but if it is to be increased we might as well get some work into British shipyards.

Mr. Neville Trotter (Tynemouth)

Does the right hon. Gentleman accept that the submarines are likely to be built in a shipyard? Is not that the most likely way in which the money will be spent?

Mr. Millan

At present we have nothing resulting from the Government's promises on naval orders. We have nothing on scrap and build. The Minister was in favour of it at one time, but that has run into the sand. There is no sign of an initiative by the Government.

Most important of all is the question of the offshore business, which is excluded from the draft directive but which is immensely important to the future of British Shipbuilders, which has set up a new offshore division to try to obtain the work that is available in this area. Despite what the Minister said about the recent BP order for a semi-submersible drilling rig, the record over the past 18 months or so is lamentable. First, there was the loss of the Shell emergency support vessel to Finland, although the order for the previous one for BP under the Labour Government was placed in a Scottish yard, Scott Lithgow. The Minister mentioned the BP rig order placed with Scott Lithgow, but the second BP rig was lost to Korea.

This has all happened within the past month. Ben Line has placed another order for a rig with Korea. Houlder Offshore is placing orders for a rig with Korea. The latest announcement, by KCA, only within the past week, which mentioned four prospective drilling rigs—I do not know how firm these orders are likely to be—was that, although it had originally been intended that the rigs would be built in the United Kingdom, all of them are now to be built in Korea. There is also the question of the tension leg platform for Conoco. As far as I am aware, there is no guarantee that that will come to the United Kingdom.

If within a country with a large North Sea oil development going on such orders go abroad at the rate at which they are now going, when we have the capacity to cope with them in this country, it is nothing short of a national scandal. I do not believe that any other shipbuilding nation would allow that to happen.

For example, the Norwegians say that every order must be built in a Norwegian yard, but it is the exception rather than the rule for that to happen here.

Some Government money will have to be involved, although I am not in favour of open-ended subsidies to oil companies and others involved in the North Sea oil business. The Government have so far set their face against subsidies for these orders. They believe that British Shipbuilders should be able to compete on an equal level with yards in Korea and elsewhere. That is impossible, particularly with the present value of sterling. If that business is not to be lost irretrievably, the Government must see that the necessary arrangements—financial and other—are made to retain the orders within the United Kingdom.

The Minister talked about wasting money, but it is the Government who are wasting money. It is being poured out in unemployment benefit. At the same time, our industrial base is being eroded. For a country with our traditions and geography, to allow our merchant shipbuilding industry to "go down the plughole" with so many of our other industries, to use the phrase of the director-general of the CBI, would be indefensible. Unless the Government produce a much more radical and energetic policy, that is precisely what will happen.

10.54 pm
Mr. Neville Trotter (Tynemouth)

It is right that we should be discussing the affairs of the shipbuilding industry in the European context, because the whole of the Western European industry is in danger of perishing if no action is taken.

I am sure that I am not the only Member to have visited the Far East. I saw for myself the competition that we all face there. In Japan, one finds extremely efficient yards with well-paid employees, extremely productive and building half the world's ships in a working week of about 40 hours, with the average pay about £7,600 a year. That is not slave labour but extremely efficient competition.

If one goes a few hundred miles further, one finds in Korea and Taiwan, like other developing countries, a different picture where 60 or 70 hours a week are worked for wages which are only half those common in Western Europe. That presents fierce competition to both the Japanese and to us. The whole of the Western European industry faces a grim future unless we face up fairly and squarely to this two-pronged competition.

It is no good dealing only through OECD—as we certainly must—with the problems presented by the Japanese industry. We must also consider what we should do about competition from the developing countries which have much lower standards of living, much lower wages and longer working hours and which are able to produce adequate ships which compete with the ships produced in Europe.

Against that background, it is no wonder that the Western European industry has withered. The cuts in the Labour force in Britain, which we all deplore, are matched by equally great cuts in Sweden and other Western European countries, both in the EEC and without. The problem will be with us for a long time. We are right to provide continuing aid for the industry in such circumstances.

The aid should be transparent. I am sick of hearing about the hidden aid given by our European competitors. I do not know whether we shall now see the nailing of such aid to the mast. I doubt it. One is often told that hidden aid is available in Western Europe.

The amount of money made available to the industry in Britain is substantial. A total of £389 million was made available up to 31 March this year. That means that about £500 million is involved if one takes account of the money since committed. We are talking about a substantial investment by Britain in the future of shipbuilding under both Labour and Conservative Governments. Such investment is right because there must be a future for merchant shipbuilding in Britain, and I believe that it s could be at a size for the industry which is not much lower than at present.

Five factors will decide the level of the industry. The first is the value of the pound compared with other currencies. All our industry suffers from that. Sometimes perhaps too much emphasis is put on that and not enough on some of the other factors. The second factor is the level of Government aid. As I have said, much has been done in that respect.

The third factor is delivery on time. The record is now much better than it was. Unfortunately, we have a lot to live down. When I was in Hong Kong I talked to the managing director of a large shipping company with 200 ships. He was a modest man. I asked him how many tons were involved and he said 20 million—more than half that in the British merchant navy. He had 50 ships on order and not one was being ordered from Britain. When I asked wily, he said "Late delivery." He told me of a series of British yards whose delivery had been 12 or 14 months late. I was happy to tell him that there had been a great improvement in industrial relations. I said that he should give us the chance to deliver on time, as I believe we can. There is no doubt, however, that this unfortunate reputation harms our future.

Mr. Ernie Ross (Dundee, West)

When talking to shipowners, will the hon. Gentleman indicate that late delivery is not always because of bad trade union relations? For instance, the Robb Caledon yard built a ship for a New Zealand cement company. The late delivery of that ship was because of design changes on which the, company insisted when the ship was being built. It had nothing to do with bad labour relations.

Mr. Trotter

If the design had been changed, I should not count that as a late delivery. The gentleman in Hong Kong was an intelligent man. He did not become managing director of 20 million tons of shipping without knowing what he was talking about. I am afraid that those were his words. I could only do my best by saying that things were now better, which I believe to be the case.

The fourth factor is the question of productivity. The chairman of British Shipbuilders is concentrating, quite understandably, on the problems arising from the value of the pound, especially when compared with the yen. But if one reads the small print of some of his comments one sees that he is concerned about the lack of productivity in some of the yards. He has referred to the way in which productivity has fallen in the past year or two.

Mr. Don Dixon (Jarrow)

When the hon. Gentleman talks about productivity, he should also talk about the tools used by the men and the lack of investment in the shipyards. When the shipyards were in private hands, they were starved of investment. The investment in the Japanese shipyards is about £2,800 per man, compared with £686 per man in the British shipyards. When talking about productivity, one must compare like with like.

When I spoke in a debate on 5 November, I said that in British shipyards men were still pushing shellplates around on wooden harrows. My hon. Friend the Member for South Shields (Dr. Clark) and the Under-Secretary of State for Employment—who is sound asleep in his place at present—visited my area. I took them to a shipyard in South Shields and showed them one of those wooden barrows. When talking about productivity, one must also talk about the tools that the men are using.

Mr. Trotter

In referring to South Shields, the hon. Gentleman is probably referring to a repair yard rather than a building yard. There has been a problem for many of the most capital-intensive yards in the world. They were tooled up to build large crude carriers of 300,000 or 400,000 tons and are carrying that capital cost while building ships of 40,000, 50,000 or 140,000 tons. There can be over-investment in capital. It is fortunate for the industry in Britain that we did not go in for massive building yards in the way that other countries did.

Mr. Douglas

Like Japan.

Mr. Trotter

The hon. Gentleman is absolutely right. If the Japanese had not succeeded in obtaining so many orders, they would be in an appalling state. If we had followed their example and gone into series production of large ships, we should be talking not about the loss of jobs that has occurred but about two or three times as many. I do not think that the main problem is capital. I think that the main problem is that if the men in a yard know that the ship they are building is the last one on the order book it is difficult to increase productivity. All hon. Members will understand that difficult human argument.

The final factor is that of flexibility in design. British Shipbuilders was taken for a ride by a gentleman who telephoned and said that he wanted to build a car carrier to bring Japanese cars to Britain and obtained much publicity for himself and his company by doing so. British Shipbuilders fell for that and gained a lot of bad publicity. Too often for my comfort I hear, however, from those concerned with the shipping industry that the possibility of obtaining ships from the British industry is ruled out because it does not want to make a certain size or type of ship. If perhaps one asks for, say, a ship of 140,000 tons, British Shipbuilders may say that it does not have a design of that size but only one of 120,000 tons or one perhaps of 170,000 tons. That attitude does not prevail in the yards in the East. They will build any ship that is required. In the present state of the market, that must be the right attitude.

I understand the advantages of standard ships and the savings in cost in producing similar ships time after time—for example, the SD14. I do not think that that policy can lead to success for all our yards at this time. Too often I have heard tales of British owners who have not got anywhere when thinking of buying new ships here because the type that they wanted was not the type that British Shipbuilders was prepared to build. That is something that the chairman should consider.

This is a short debate and I shall not say much more, but I wish to raise the question of redundancy pay. I heard what my hon. Friend the Minister had to say about the possibility that the document on redundancy pay would not get past the opposition of other countries in Europe. I must ask, however, whether the scheme is intended to apply to private yards as well as public yards. If that is the principle in Europe, it is one that could be adopted in Britain, too. I see no reason why those who work in the private sector in the industry should operate in conditions that are different from those that apply in the public sector. There are those who say that they are in danger of losing their jobs because they are being undercut in the private sector by the heavily subsidised public yards that are only a few miles away.

Having regard to the Government's general philosophy, it is only right that the private yards should be included in the scheme. It is even more right that they should not be undercut in the way that I have described. I hope that my hon. Friend will bear that in mind in future and will bring pressure to bear on British Shipbuilders to ensure that it does not obtain work for itself at the taxpayers' expense by closing down a yard a few miles away that is in private ownership.

11.6 pm

Dr. J. Dickson Mabon (Greenock and Port Glasgow)

I do not understand why the Minister cannot accept the amendment. We are debating Community legislation and we are asking that the House should not accept the instrument in its present meaning and form. If the Government were to accept the amendment without a Division, they would be able to return to the negotiating table and say "The instrument is not enough." I think that most hon. Members on both sides of the House will agree that the instrument has not gone far enough.

The hon. Member for Tynemouth (Mr. Trotter) made a very good speech. He talked about Western Europe. We are in Western Europe and we are in the Community, which is the largest trading bloc in the world. We must be able to build the means whereby we are able to ship our trade throughout the world. The United States learnt to its horror during the Second World War how silly it was to give up its ability to build ships. We in Western Europe would be mad to throw away our capacity to build ships, which enables us to live by our trade. That is a fundamental. There is no party difference on that score. It is obvious that we should agree on that.

The British industry is the most important in Western Europe. Apart from our own industry, the industries of France and Germany, for example, are perishing. That is not happening in the face of Korean competition or that of developing countries, severe though that may be. It is happening because of the supremacy of a highly corporate State called Japan. It is enormously well organised. It has a collectivism that is unknown to the Socialist Party in this country and certainly unknown to the Conservative Party. It has a willingness to back its industry with all sorts of subsidies that are cheats.

My right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) spoke of the Japanese figures. They are frauds beyond belief. The Japanese come to Europe pledged to reduce their exports of cars, ships and the rest. They say "We are taking too much of your market. We shall reduce our exports to this figure." That is fine, but they never do it. In fact, they double their exports. We still believe innocently that they will all be nice Japanese in the end and will play fair. They will not do that.

That is why I cannot understand why the Minister does not embrace the amendment and say "We are going to Europe to tell the Europeans that we are fed up with the Japanese and the way in which they are going about things. We are putting up with this no longer." We must ensure that we have a shipbuilding industry in Britain or Western Europe in the next few years.

The yards in my constituency have virtually given up trying to get merchant shipping orders. I thank the Minister for the help that he has extended to the yards in my constituency that are trying hard to obtain high technology orders. Perhaps Western Europe can build the high technology ships that the Japanese, with all their ingenuity, cannot build.

I hope that very soon the recession will be over and trade will blossom. That is when we shall have to build merchant ships. Britain will not be able to build the ships because we will have sacked all the men and the yards will be closed.

I am surprised that the Minister is not willing to accept the amendment in the spirit intended. It is not intended to do down the Tories. It is meant to try to say to our European partners that we in Britain have had enough and will not shut down any more yards. We want to keep our capacity and to remain a shipbuilding country. Other countries in Europe should join us. I am not in the least concerned about the Treaty of Rome, competition rules and so on. We are not fighting among ourselves in the EEC for orders. We are fighting against the remainder of the world. Europe is not divided. We should be united in trying to sustain our shipbuilding, basis.

Our Ministers should go to Brussels and say that the draft directive is ineffective. The draft directive is well meaning and has some good points, but it is not enough. Europe should demand a positive shipbuilding policy.

Viscount Davignon is the present Commissioner and may well be reappointed to be in charge of industry.

Mr. Douglas

Oh, no!

Dr. Mabon

Do not hex him, for goodness sake. Whoever he is, let us have a Commissioner who believes in intervention not in industries that are uncompetitive but in industries that are strategically necessary for the economic well-being of Europe. That is the important point. The Right-wing Tories who believe in competition are old-fashioned. This is not a world of true competition. If anyone disbelieves that, let him ask any Japanese business man. We should wake up and realise that we have a tremendous threat, which has continued not for one, five or 10 years but for all the time that I have been in Parliament. For nearly three decades we have had a challenge from the Japanese, who are very good at doing us down at every stage. We soft-hearted souls let them carry on in the interests of competition, productivity and delivery on time.

I hope that we shall monitor the Government's disgraceful award to the Finns of the ship that they are building on equal terms with the one that we are building in the Clyde. I bet that we shall build ours more quickly, better and more cheaply. I challenge the Government to recognise that. We must explode these Hong Kong myths mentioned by the hon. Member for Tynemouth by a unity between the two parties and not by division and fighting with each other.

There may be some private shipbuilding yards, but the bulk of shipbuilding in Britain is in public hands and will remain so for a long time, despite anything that the Government do. No one will buy into shipbuilding. It is too difficult. We have to decide as a country whether we want a public or private shipbuilding industry. The answer must be a public industry.

Mr. Bill Walker (Perth and East Perthshire)

Does the right hon. Gentleman agree that it is not a myth that Scottish yards depend very much on defence orders? Can we look to the Opposition for support for increasing defence expenditure, particularly in the shipyards?

Dr. Mabon

Yes, of course. The Labour Party may be somewhat opaque over defence. It is in favour of multilateral disarmament, but it is anxious that we should maintain our ability to defend ourselves. All our yards, including Harland and Wolff, which is a public yard although it does not belong to British Shipbuilders, essentially want to have their share of what is available. No country in the world, apart from Britain, would be willing to see orders from our interests in the North Sea go to other countries. No other oil country would do that. It is nonsense to go to Finland or elsewhere to build a ship for our Navy. The Royal Navy would not put up with that. Our Royal Navy ships must be built in Britain. The Royal Navy has been a national service since Henry VIII.

Why do we not build not all but most of our oil ships in this country? The Norwegians, who are not in the Common Market, build their own ships. The French and the Germans, who are in the Common Market, like everybody else in the oil business, build their own ships. Therefore, why cannot we do the same?

I give the Minister credit for getting us the second BP order. He lost the first order, so he is one up and one down. We give him credit for being one up. He is not totally incompetent; he is only half competent. We would like him to get all the orders for all the activities in the oil sector and in the Navy sector, whatever our defence programme may he.

We in Britain have to face the fact that in Europe—and I am a very pro-European fellow—

Mrs. Peggy Fenner (Rochester and Chatham)

The right hon. Gentleman is a brave man.

Dr. Mabon

Yes, I am a brave man. It is no criticism of Europe that it does not get things right any more than it is that the British Parliament does not get things right. It is more important that in the Community we fight for the things that are true. The survival of the shipbuilding industry in Western Europe and in Britain is vital for the health of all.

11.16 pm
Sir David Price (Eastleigh)

I have a great deal of sympathy with what has been said by the right hon. Member for Greenock and Port Glasgow (Dr. Mabon).

I draw the attention of the House to the fact that the accompanying letter to the main document is signed by our former colleague Christopher Tugendhat. I feel that the whole House will wish to congratulate him on surviving the attack on his life today. It is appropiate that one of us should pay tribute to him.

The accompanying letter refers to the situation in European shipbuilding continuing to be "one of crisis". One can argue about the use of the word "crisis" in the context of a continuing situation. It is misused clinically. It means a serious situation, as I am sure we would all agree. We are told in the document that between 1975 and 1979 employment in EEC shipyards fell by 35 per cent. and output by 40 per cent.

The right hon. Member for Glasgow, Craigton (Mr. Millan), so to speak, stole the figures that I have, but I do not criticise him for that. This is the object of parliamentary questions. However, I should like to add to one of the conclusions that we can draw from those figures.

The figures show the comparision in the order book between the first half of this year and the first half of last year. It is interesting that, whereas for the first half of 1979 orders taken by all EEC yards represented 49 per cent. of Japanese orders, for the comparable period this year they represented only 30 per cent. In other words, they remained almost static, with a slight variation in the mix of countries in the EEC. However, Japanese orders for the first half of this year have gone up from 1,700,000 gross compensated tonnes to 3,700,000 gross compensated tonnes. There has been an almost threefold recovery, because it is a recovery from the depths of the shipbuilding slump.

I find it deeply disturbing that the Japanese, who had the enormous commitment to super-tankers and so on, should have made this recovery. One could explain the big fall in their order book in 1978–79 as being due to oil pollution caused by the super-tankers. However, I have every reason to suppose that that big increase has not been entirely due to a take-up in new orders for super-tankers, because that still remains a slightly slack part of the market. I would not begin to draw a conclusion about British yards, but in the total European context I ask this question, which none of the documents attempts to answer: how has Japan been able to succeed where Europe has failed?

With respect to those who bring up the exchange control point, discussions that I have had with shippers in various parts of the world indicate that, as my hon. Friend the Member for Tynemouth (Mr. Trotter) said, it is a factor, but it is by no means a unique factor. It applies also to the other European countries. That is the point. Whereas the pound vis-a-vis some of the other EEC currencies has gone up, that does not account for the fact that the Germans, the French and others have not been picking up equally. It is a deeply disturbing position, and I do not think that these documents assist us at all in solving the matter.

There is a lot of talk in the new directive about restructuring, but we are given no indication of what restructuring means. For instance, in the explanatory memorandum on the directive, at paragraph 3.5, we read: It provides that production aid may be considered compatible with the Common Market if it is linked to restructuring, is degressive"— a curious term of art— and does not affect trading conditions to an extent contrary to the common interest. What does that mean in the present context?

I do not know whether hon. Members have received a document called "Background Report" from the European Communities Commission, with that very European address, 20 Kensington Palace Gardens. It gives an explanation to simple Members such as myself of all these documents. It is headed "Aids to Shipbuilding" and one reads at the end of it: The complaint of British and other EEC shipbuilders is that neither earlier directives nor the new Commission proposal offer a comprehensive strategy for Community shipbuilding. Reduction of capacity alone is an expedient, not a strategy. On the assumption that subsidies are necessary if Community shipbuilding is to survive and offer a competitive challenge, particularly to Japan,"— the point that I have been trying to make— the industry believes that it should be explicitly stated in the directive that the objective is a viable level of capacity in the Community industry, utilising only that amount of state aid necessary to attain this objective. It is rather interesting that from another part of the EEC machinery one reads those words, which go a long way to amplifying the views that we are expressing here tonight.

The directive seems to be simply a means of facilitating the further reduction of Europe's shipbuilding capacity. It attempts, very properly, to ease the pain, and I hope that in all parts of the House we would have common agreement on that. I regard that as a perfectly respectable objective. On those grounds alone, it should be supported. But it does not amount to a strategy for reviving the fortunes of European shipbuilding. I would not agree necessarily with the Opposition that that should be at the present capacity, but we in Britain must retain a minimum level of shipbuilding capacity for reasons of security. I emphasise economic security, curiously enough, even more than military security.

I do not like being put in a monopoly position as a buyer; I wish to retain my own freedom of action. I am sure that the views I hold are shared throughout the EEC and that it is not a uniquely British position. But there is nothing in the proposals to suggest that the Commission has made any progress at all in formulating a European shipbuilding policy.

My question was in relation to the OECD countries. As my hon. Friend the Member for Tynemouth pointed out, it is a question not just of Japan but of Korea and Taiwan as well. Brazil is now building ships. It is a worldwide matter. It is not surprising if there is some doubt—as the Minister seemed to suggest—whether the directive will go through the Council of Ministers. I hope that my hon. Friend the Minister will clarify this point. We may all get excited about something that is not to happen and may become a non-event. But there must be an adequate strategy throughout the EEC about how we are to handle the matter, otherwise we shall go on with a declining shipbuilding industry in each of our countries, putting in taxpayers' money to little purpose.

There is doubt about what the major directive deals with. In that situation, we can find it easy in our hearts to support the second directive, which seems to be a genuine attempt to try to ease the problems of some of the workers concerned. If I were to be critical of it, it would be on account of the fact that it is too narrowly defined. The accompanying memorandum from the Department says that it is experimental.

If we had the time, we could question my hon. Friend the Minister a good more severely about the meaning of the directive. The facts are simply that between 1975 and 1979 36 per cent. of the jobs in European shipbuilding were lost. The comparable figure in this country was 43 per cent. The figures already quoted for British Shipbuilders show that it is a vain hope to imagine that nationalising the industry will secure employment. I am sure that we can support the directive. It is, however, a minor proposal.

These proposals should be accepted by the House because they endeavour to cushion the economic and social effects of the continuing crisis in European shipbuilding. In my view, they do not provide a basis for its revival, which the House agrees is what we would like to see. We cannot take much comfort from the proposals, although they may marginally help our industry. As is so frequently the case, we are back to being on our own.

11.26 pm
Dr. David Clark (South Shields)

This has been a well-informed debate, as are most of our debates on shipbuilding. I hope that the Minister has taken the message that Members on both sides of the House feel concern about the present low level of British shipbuilding capacity. The hon. Member for Eastleigh (Sir D. Price) made the point that we might not be in crisis — or, alternatively, that we are in permanent crisis—but that, nevertheless, there came a time when the level of capacity was critical.

We are discussing these documents against the background of such a critical level. We do not want to cry "wolf" too often, because we all know what the repercussions of such a course can be. Nevertheless, the fact remains that we discuss these documents against a dire background. it may be argued that the whole theme of our discussions is wrong. As I understand it, the documents basically try to increase co-operation within the EEC. That is laudable. I fully understand such a motive. However, bearing in mind the drastic reduction of shipbuilding capacity throughout the EEC, I am not sure that that is the real problem.

The problems which the documents should have addressed are the problems of survival of shipbuilding, not only in Britain but throughout the world. I find it difficult to make comparisons between the various subsidies, as the documents seek to do. I can remember, in this House, first hearing denials that subsidies were given to our EEC competitors. Gradually the figures came out and it was accepted that there were considerable subsidies given to every EEC shipbuilding country.

These regulated subsidies do not give us the true picture. The British shipbuilding industry has high energy costs. We constantly hear the CBI and the manufacturers complaining about unfair competition because of the high energy costs in this country. By its nature, British shipbuilding—and the British steel industry—has high energy costs. In a sense, we are handicapping ourselves by agreeing to regulate the level of subsidies. I feel that often in the EEC we are the only ones who abide by the rules. That has been manifestly the situation in almost every activity in the EEC. That concerns us greatly.

I want to develop the point made by a number of hon. Members. I first started work on the land. Hon. Members on both sides of the House agree that we have to subsidise our agriculture industry because it is strategically necessary. The average farmer in England receives a subsidy from the Exchequer of about £7,000 a year. I am not grumbling about that; I ant merely trying to lay out the facts clearly. In the steel industry, when men were being laid off they were being subsidised to the tune of about £1,400.

My argument is that at this moment, when we should be fighting for the survival of our shipbuilding industry, we should be prepared to subsidise it. We are in the difficult situation of tying our own hands by tying our level of subsidy to an uneconomic level.

My basic argument is that these directives do not and will not create the situation in which we can expand or even stabilise our shipbuilding capacity in face of the competition from the Far East. The Government should accept our amendment and in that spirit go back to the Council of Ministers and get some improvement so that not only could the British shipbuilding industry stabilise itself but the European industry could stabilise itself as well.

11.32 pm
Mr. Adam Butler

With permission of the House, I shall try to answer the various points raised during the debate.

First, I point out to my hon. Friend the Member for Tynemouth (Mr. Trotter) that the proposals by the Commission for payments under the social fund would not be confined to public sector companies, although, as he is aware, the redundancy payments scheme does not apply to the private sector.

The right hon. Member for Glasgow, Craigton (Mr. Millan) expressed some concern about article 9. I tried to spell it out initially. It is a new article as far as the directive is concerned and brings within the scope of the directive elements of aid which may be present in any direct or indirect financing measures to the private or public sector shipbuilding or ship repair industries.

It does not present an automatic power to the Commission — indeed, that power already exists in article 92 of the Treaty of Rome—to probe the financial relationships of British Shipbuilders and Her Majesty's Government. Thus, in our view there is no new power as such, and there is no automaticity about this provision. Indeed, it should enable us to press for investigation of other countries' practices should that he felt necessary. For that reason, we are prepared to accept and, indeed, welcome article 9.

It is not entirely easy to say what aid is considered to be relevant under this article, but — here I give an example but am lot laying down law—it seems to me that if losses which are financed by a national Government are losses which arise out of orders for individual ships, that may well be relevant to this article, but losses sustained by a public sector or private sector industry due to unfilled capacity may not be relevant in this case. There is a distinction between production aid and loss financing of the kind that I have described.

My hon. Friend the Member for Eastleigh (Sir D. Price) questioned the definition of restructuring. The significance of the draft directive is that restructuring goes wider than just capacity reductions. As my explanatory memorandum to Parliament made clear, restructuring can now include all measures enabling the shipbuilding industry to become competitive. Thus, I should not want to describe, as my hon. Friend did, the draft directive as a measure purely to facilitate the contraction of shipbuilding. If it can embrace measures to enable shipbuilding to become competitive, my hon. Friend can see that there is an important distinction in that case.

Sir David Price

Can my hon. Friend spell out a little more what sorts of matters would receive aid? Would it be building a new yard? Would it be covering it in? Would it be buying new machine tools?

Mr. Butler

I think that the definition of contraction does not need spelling out, but to improve competitiveness does not involve just the closing of yards. Improved competitiveness can come about through reductions in manning, through investment in new plant, and so on. There are various ways in which the competitivenes of a yard or an industry can be improved. It is important for the House and the industry not to be led into believing that the directive is concerned soley with the contraction of the industry, although it is obviously relevant to it.

The question of defence orders was raised, as it so frequently is in the House. I think that we have to get matters into perspective. If we look at the record of military orders—Naval, and Army in a couple of cases—since May 1979, we find that 14 major orders, orders for other minor vessels and substantial refitting contracts have been placed with British Shipbuilders. It is important to get that into perspective.

We on the Government Benches are not prepared to accept lectures about the Trident expenditure from a party which certainly amongst its leadership, and in its ranks, has people who believe in unilateral disarmament. I hear someone say that that is irrelevant, but it is highly relevant if a party is led by a right hon. Member who has been a life-long advocate of nuclear disarmament. If I were a voter in Barrow-in-Furness or in any other yard that thought that it might get orders, I should know where to put my X in future.

Mr. Robert Hughes

Is it not the case that the Government are in favour of multilateral disarmament? Would not that also lead to a loss of jobs?

Mr. Butler

The Government are in favour of balanced multilateral disarmament. At the moment, there is no indication that the Soviets are prepared to take any part in such an operation. That is our policy, whereas that of the Labour Party is one of unilateral disarmament. I need not emphasise the point; it has been made. I realise that the point is sensitive to Labour Members, but that is why we are not prepared to be criticised for our attitude towards defence expenditure.

Mr. Dixon

The Government say that they are interested in defence, but they are closing down all the shipyards, so who will build the ships in future? I do not know how many Conservative Members have worked in shipyards. I have worked in shipyards all my working life, and I would sooner work on a passenger liner than a cruiser.

Mr. Butler

I have told the House, and I repeat, that it is not the policy of this Government to close British Shipbuilders.

I turn now to the question of merchant orders, because it is relevant to the directive and to the question of aid to shipbuilding. British Shipbuilders has done better in the way of orders this year. Certainly the Japanese have increased their share of world orders, but so has the United Kingdom industry. So far this year it has taken orders for 285,000 tonnes, compared with approximately 240,000 tonnes in each of the previous two years. The Opposition have criticised the fact that the intervention fund percentage has been reduced from 30 per cent. Those 285,000 tonnes have almost all been achieved at the level of 25 per cent. intervention fund assistance, so it cannot have done the sort of damage that was suggested.

The right hon. Member for Greenock and Port Glasgow (Dr. Mabon) asked why the Government were not prepared to accept the amendment in the name of the Opposition. I have spelt out my reasons for rejecting it. As is so often the case, the Opposition are not prepared to face up to the reality of the situation. They believe that there should be no more contraction of the industry, regardless, whereas the facts may be such that contraction has to take place. They believe that subsidy towards the industry should be permanent and continuing. That is not acceptable to us. In the past, the directives have allowed countries to give effective support to their industries.

I say to my hon. Friend the Member for Eastleigh that I hope I did not express doubt about the directive being agreed to. It has general support, and certainly the warmest support of the Government. We shall see what the Council of Ministers decides this month, but there should be no doubt on the matter. It is because we can look to the effectiveness of previous directives, because we subscribe to the more comprehensive nature of the fifth directive and because we subscribe to the importance of not perpetuating credit and subsidy races in the Community that I commend the motion to the House and reject the Opposition's amendment.

Question put, That the amendment be made:—

The House divided: Ayes 68, Noes 118.

Division No. 8 [11.43 pm
Abse, Leo Freud, Clement
Alton, David Golding, John
Booth, Rt Hon Albert Grant, John (Islington C)
Bradford, Rev R. Harrison, Rt Hon Walter
Callaghan, Jim (Midd't'n & P) Haynes, Frank
Carmichael, Neil Home Robertson, John
Clark, Dr David (S Shields) Homewood, William
Cocks, Rt Hon M. (B'stol S) Hooley, Frank
Concannon, Rt Hon J. D. Howells, Geraint
Cowans, Harry Hughes, Robert (Aberdeen N)
Cryer, Bob Jay, Rt Hon Douglas
Dalyell, Tam Jones, Rt Hon Alec (Rh'dda)
Davies, Rt Hon Denzil (L'lli) Kaufman, Rt Hon Gerald
Davis, T. (B'ham, Stechf'd) Leighton, Ronald
Deakins, Eric Mabon, Rt Hon Dr J. Dickson
Dewar, Donald McCartney, Hugh
Dixon, Donald McCusker, H.
Dormand, Jack McDonald, Dr Oonagh
Douglas, Dick McTaggart, Robert
Duffy, A. E. P. Millan, Rt Hon Bruce
Dun woody, Hon Mrs G. Molyneaux, James
Eastham, Ken Morris, Rt Hon C. (O'shaw)
Ellis, R. (NE D'bysh're) O'Neill, Martin
English, Michael Parry, Robert
Evans, John (Newton) Penhaligon, David
Foster, Derek Powell, Rt Hon J.E. (S Down)
Powell, Raymond (Ogmore) Watkins, David
Roberts, Ernest (Hackney N) Welsh, Michael
Rooker, J. W. Willey, Rt Hon Frederick
Ross, Ernest (Dundee West) Wilson, Gordon (Dundee E)
Ross, Stephen (Isle of Wight) Woolmer, Kenneth
Ross, Wm. (Londonderry) Wright, Sheila
Sheerman, Barry
Smith, Rt Hon J. (N Lanark) Tellers for the Ayes:
Spearing, Nigel Mr. George Morton and
Steel, Rt Hon David Mr. Joseph Dean.
Alexander, Richard Marlow, Tony
Ancram, Michael Marshall Michael (Arundel)
Atkins, Robert (Preston N) Mates, Michael
Baker, Nicholas (N Dorset) Mather, Carol
Bell, Sir Ronald Maude, Rt Hon Angus
Benyon, Thomas (A'don) Maxwell-Hyslop, Robin
Berry, Hon Anthony Mayhew, Patrick
Best, Keith Mellor, David
Bevan, David Gilroy Meyer, Sir Anthony
Blackburn, John Mills, Iain (Meriden)
Boscawen, Hon Robert Moate, Roger
Brinton, Tim Morrison, Hon P. (Chester)
Brocklebank-Fowler, C. Mudd, David
Brooke, Hon Peter Myles, David
Brown, M. (Brigg and Scun) Neale, Gerrard
Bruce-Gardyne, John Nelson, Anthony
Bulmer, Esmond Neubert, Michael
Butcher, John Newton, Tony
Butler, Hon Adam Page, Rt Hon Sir G. (Crosby)
Cad bury, Jocelyn Page, Richard (SW Herts)
Carlisle, Kenneth (Lincoln) Parris, Matthew
Clark, Hon A. (Plym'th, S'n) Patten, John (Oxford)
Clarke, Kenneth (Rushcliffe) Price, Sir David (Eastleigh)
Clegg, Sir Walter Proctor, K. Harvey
Cockeram, Eric Rathbone, Tim
Cope, John Rees, Peter (Dover and Deal)
Cranborne, Viscount Renton, Tim
Critchley, Julian Rhys Williams, Sir Brandon
Dean, Paul (North Somerset) Ridley, Hon Nicholas
Dorrell, Stephen Roberts, M. (Cardiff NW)
Dover, Denshore Sainsbury, Hon Timothy
Dunn, Robert (Dartford) St. John-Stevas, Rt Hon N.
Fairbairn, Nicholas Shaw, Giles (Pudsey)
Faith, Mrs Sheila Shepherd, Colin (Hereford)
Fenner, Mrs Peggy Sims, Roger
Fletcher, A. (Ed'nb'gh N) Skeet, T. H. H.
Fraser, Peter (South Angus) Speed, Keith
Gardiner, George (Reigate) Speller, Tony
Garel-Jones, Tristan Spicer, Jim (West Dorset)
Gorst, John Spicer, Michael (S Worcs)
Griffiths, Peter (Portsm'th N) Stan brook, Ivor
Grist, Ian Stradling Thomas, J.
Gummer, John Selwyn Taylor, Teddy (S'end E)
Hawksley, Warren Thomas, Rt Hon Peter
Heddle, John Townend, John (Bridlington)
Henderson, Barry Wakeham, John
Hicks, Robert Walker, B. (Perth)
Hogg, Hon Douglas (Gr'th'm) Ward, John
Hunt, John (Ravensbourne) Warren, Kenneth
Hurd, Hon Douglas Watson, John
Jopling, Rt Hon Michael Wells, Bowen
Kitson, Sir Timothy Wheeler, John
Knox, David Wickenden, Keith
Lawrence, Ivan Williams, D.(Montgomery)
Le Marchant, Spencer Winterton, Nicholas
Lester Jim (Beeston) Wolfson, Mark
Lloyd, Peter (Fareham) Young, Sir George (Acton)
Loveridge, John Tellers for the Noes:
MacGregor, John Lord James Douglas-Hamilton and
MacKay, John (Argyll) Mr. David Waddington.
McNair-Wilson, M. (N'bury)

Question accordingly negatived.

Main Question put and agreed to.

Resolved, That this House takes note of European Community Document No. 9866/80 and supports the Government in its efforts to ensure the continuation of art agreed framework within which temporary aid, in the light of the present crisis, may be provided to the Community Shipbuilding Industry.