§ The Under-Secretary of State for Employment (Mr. Patrick Mayhew)
I beg to move,That the draft National Dock Labour Board (Increase of Loans Limit) Order 1980, which was laid before this House on 27th October, be approved.The Dock Work Regulation Act 1976 limits the amount which the National Dock Labour Board is permitted to have outstanding by way of principal on loans to £10 million but makes provision for that amount to be increased by order to an amount not exceeding £30 million. The effect of this draft order is to increase the limit to £30 million. The purpose of this additional loan facility is to enable the NDLB to finance further voluntary severances of registered dock workers. There is no other purpose and no loan has in the past been made for any other purpose.
Registered dock workers were excluded from the scope of the Redundancy Payments Act 1965 at the industry's request. Instead, a national voluntary severance scheme was established in 1969 by agreement within the national joint council for the industry, and it is under its provisions that the number of registered dock workers has declined from 54,000 to under 24,000, with remarkably little industrial disruption.
The national voluntary severance scheme is administered by the NDLB, which has the statutory duty of keeping under review the size of registers of dock workers in each port. The scheme provides for severance payments according to scales calculated by reference to length of continuous service, in addition to a basic payment. The cost of such severance is met by levies upon employers, calculated as a percentage of gross wages in the industry, and paid through local dock labour boards. The maximum that may be awarded on severance under the scheme is now £10,500, which would be applicable only in the case of a man with not less than 20 years service. That was agreed within the industry in September, because the previous maximum of £8,500 was failing to attract volunteers in sufficient numbers to deal adequately with surplus dock labour.
1030 The scales of severance payments are a matter for the industry rather than for the Government. Compulsory severance is possible, but it is the employers' own preference—expressed through the National Association of Port Employers—to achieve reductions in surplus labour by virtue of voluntary rather than compulsory means.
Although the severance scheme is financed by employers, successive Governments have made loans to the NDLB to spread the costs falling on the industry over a reasonable period. Without such assistance port employers would face the need for frequent adjustments in levy, which might cause considerable difficulty in fixing prices. The 1946 Act, under which the present dock labour scheme was made, contained provision for the Minister to make loans to the NDLB towards the cost of operating schemes. Loans totalling £11 million were made by my Department under this provision between 1969, when the national voluntary severance scheme was introduced, and 1975. Authority for such loans is now contained in the Dock Work Regulation Act 1976, and £2 million in all was loaned under this provision in 1977 and 1978. With the exception of some £200,000 repayable by February 1982, all these loans have now been repaid.
Earlier this year, it became clear to the NDLB that the number of severances required in the near future was likely to be considerably higher than in recent years, and that this was likely to lead to cash flow difficulties for the board. In April, my right hon. Friend agreed to a request for a £6 million loan for severance from the Government and authorised the board to borrow a further £2 million by way of bank overdraft. Subsequently, approval was given last month for a further £1.8 million loan to meet the board's current needs, as the scale of the industry's likely severance requirement began to emerge more clearly. That has brought the board's borrowing up to the prevailing limit of £10 million.
The upsurge in the number of surplus registered dock workers is evidently due to a combination of the current recession in world trade and the continuing containerisation of cargoes, which has greatly reduced the amount of conventional cargo-handling in United Kingdom ports.
1031 I understand from the NDLB that it anticipates a total of 3,000 severances being needed in this financial year with substantial further numbers being needed next year. This might mean a considerable sum of money being required by way of Government loan.
The Government believe that they should stand by the industry in its efforts to reduce its labour force. If those efforts are not successful, more registered employers will go to the wall and the future of some of our major ports will be in jeopardy. The port employers have agreed to increase national severance levies by two percentage points by January 1981 and the Government accept that a higher increase in present circumstances would only aggravate the industry's difficulties. The balance of current severance costs will therefore need to be met from loans.
It is very much in the immediate, as well as the long-term, national interest that the existing surplus labour in the ports should be shed on terms that are mutually agreed. It is fair to say that, when the present limit was fixed for outstanding NDLB borrowing, no one foresaw the scale of the problems that the industry subsequently encountered, or the need that has emerged to increase the scale of severance payments. In the light of present estimates, it is prudent to ask parliamentary approval for the £30 million ceiling permitted by the 1976 Act. I accordingly seek the agreement of the House to the motion approving the draft order.
§ Mr. Harold Walker (Doncaster)
The Minister began his speech by referring to the powers under which this order is made. They are contained in the Dock Work Regulation Act 1976. The Minister was not a member, as I was, of the Standing Committee that considered the Bill. I should like to remind him that his right hon. and hon. Friends not only opposed the provisions under which the House is making this order but voted against any such provision. If my memory serves me right, they voted in favour of curtailing and reducing the borrowing powers embodied in it.
Today's order is welcome evidence of some degree of Government conversion. Fast may that conversion grow and 1032 spread into other fields. Perhaps the Government are being compelled by reality to face up to the facts. Perhaps we have witnessed a triumph of experience over hope. Perhaps it is a "Mayhew turn". I hope that it will lead to bigger U-turns. The doctrine of non-intervention may be diminishing daily, or weekly.
The Minister did not mention Liverpool, but there is little doubt that the timing of the order received some stimulus from recent events in that city. The Government have been pushed along by the recent irresponsible action of mindless militants on Merseyside, who have acted in flagrant breach of a national agreement. During September, it almost caused a national dock strike. I refer not to members of the Transport and General Workers Union or to members of any other union but to the ports employers, or at least some of them. In particular, I refer to the West Coast Stevedoring Company, which is owned by the tax-dodging Vestey family.
I quote from The Guardian of 12 September which said in a leader that day:It was the refusal of the hard-strapped Liverpool employers to pick up the pay tabs for 170 dockers to be declared redundant as their employer goes out of business which sparked the current strike threat.I doubt whether anyone, by any stretch of the imagination—and I am not being indifferent to the very real problems of some employers in the industry—could claim that the Vesteys were "hard-strapped", which I presume means hard-up. Incidentally, despite what the Minister said, there has been no significant decline in the number of licensed employers in the last five years.
I am not given to invoking the Daily Mail in my aid, but on 18 September that paper said:The Liverpool employers went looking for 'bower'.It is really regrettable that it took the threat of a national dock strike to bring those employers to their senses. We not only have this order before the House; we have the reaffirmation and the improvement of the national voluntary severance scheme, together with a clear commitment from the National Association of Port Employers. I shall quote from a letter signed on 18 September by 1033 the secretary of that association. It said:The Port Employers accept that the existing practice will continue whereby the temporary unattached register will not be used except for the strict purposes of administering disciplinary procedures within the terms of the National Dock Labour Scheme.In a separate letter of the same date the National Association of Port Employers, through its secretary—reaffirmed that unemployed dock workers would be reallocated by the appropriate local board to other registered port employers. Indeed, it might be for the benefit of the record if I quoted the letter in toto. It was addressed to Mr. Tom Cronin, who is the secretary of the workpeople's side of the National Joint Council for the Port Transport Industry. It says:Dear Mr. Cronin, The decision of the National Port Employers is that before 30 September 1980 registered dock workers currently employed by T & J Harrison and Bulk Cargo Handling Services Limited"——the employers who were going out of business and whose employees had to be reallocated—will be reallocated by the local board to other registered port employers to commence employment on 1 October 1980.Then comes a significant sentence.This agreement and procedure will apply nationally to the ports industry, Yours sincerely, E. Bainbridge.Not only do we have the order as a consequence but we have reaffirmation of the practices that have been so beneficial in the last few years in improving industrial relations in our docks industry.
Perhaps there are some hon. Members who will say that these pledges were wrung out of reluctant employers only by the threat of strike action. Once again I quote the Daily Mail dated 18 September:However potentially damaging to the nation, it is a legitimate brandishing of the strike weapon.That was the threat of industrial action that might have led to a national dock strike in September. In this case in Liverpool just a few weeks ago it was the employers who were jeopardising good industrial relations which had been painstakingly built up over the last few years.
I quote again from the leader in The Guardian. Hon. Members might think 1034 that I have some prejudice and bias in these matters which they might not feel is shared by The Guardian newspaper. That paper said:Which militant and well-organised union has shed well over half of its members in the past five years without a single serious stoppage? Which supposedly aggressive and strike-happy band of brothers has, through those five years, changed its image from one of 'mindless militancy' to almost excessive respossibility? The answer, in both cases, is the Transport and General Workers Union docks section. As the threat of a national dock strike, the first since 1972, looms on the horizon, it is worth remembering that the industrial relations and industrial efficiency in the docks have improved out of all recognition in recent years. Much of that improvement is due to the imagination and foresight of the former TGWU boss Jack Jones and Lord Aldington, then chairman of the Port of London Authority, who eight years ago, brought the last in a series of national dock strikes to an end with an unprecedented new deal for the dockers.In the same leader The Guardian said:It is time to make them (the dockers) an offer that they can't refuse: an offer far, far higher then current rates. That will involve further Government subsidy. In this case it is justified.The revised national voluntary severance agreement with the increase in the maximum payment still falls a long way below that which The Guardian leader writer calls for. The order provides not for the subsidy to which the leader refers, but a loan which must be repaid with interest. The Minister, if he replies to the points that have been made, can perhaps tell us what rate of interest the National Dock Labour Board will be charged on the loan. He also might tell us whether the board has given any indication of the drawings it intends to make against the new ceiling.
It is worth my emphasising a point that the Minister made—that dock workers are not included in or covered by the provisions of the Redundancy Payments Act. When hon. Members or the public generally look at the maximum scale of compensation payable to dock workers for loss of jobs, they should bear that fact in mind. It is no less important to recognise that few, if any, of the port areas of Britain can offer fresh employment to a redundant docker. Certainly that cannot be done in Liverpool. Severance from dock work invariably means severance from employment. If the House needs to be reminded of this I am sure that the dockers do not.
1035 There is undeniably surplus labour in the docks industry. Hon. Members need only look at the most recent annual report of the National Dock Labour Board. The facts are spelt out there. It would be unrealistic, indeed naive in the extreme, for us to imagine that a man contemplating the prospect of joining the long-term unemployed will do other than put a very high price on the job that he already has.
I have already referred to the great benefits that we have derived from the Jones-Aldington deal. When I say "benefits that we have derived", I mean not only the dock industry, the employers and the workers but the Government and the nation as well, because they have received benefits, too. We all hope that the good industrial relations that have been built up will continue and will be strengthened by provisions such as those to which I have referred and which have been made possible in some degree by the order that we have before us.
We must be prepared to pay for those benefits. That means not only enabling the National Dock Labour Board to borrow the sums that it needs but, where necessary, enabling it to do so on preferential low interest rates for long-term loans. The Government must be prepared to approve the necessary grants needed. They must be prepared to will the resources needed for retraining dock workers. I shall resist the temptation to link that with the criticisms I have made frequently in this House, and will continue to make, about the Government's cutting down of the provision that we make for training when it is crucially important in this area. We all recognise that there is an excess of labour in the docks and that it is in the interests of the ports industry to ease the transfer of that labour out of the docks. We must try to do so, not only by providing financial incentive but by seeking, wherever possible, to retrain dockers for other employment and to make sure that the opportunities for that other employment are available. That also means providing new employment opportunities in the port areas such as Liverpool, where at present job prospects are appallingly grim.
We welcome the order and give it our blessing. However, we should like the Minister to comment on two recent 1036 articles in the Journal of Commerce. My hon. Friend the Member for Bootle (Mr. Roberts) may also be seeking information about the same matters. On 22 October that publication carried two deeply disturbing articles. The front page states:Shock report may kindle dock strike.A national dock strike—supported by Continental port workers—is being openly discussed in UK ports.The strike talk is prompted by rumours of a special Transport Department report, said to be scheduled for release on November 4, which proposes fundamental changes in the way the country's ports are run …The jobs of some 1,500 Liverpool registered dock workers are likely to be axed and up to three times that number among ancillary staff are believed to be in jeopardy.The Transport Department's report is thought to contain a hard-hitting plan to abolish local branches of the National Dock Labour board".The House is entitled to know whether there is a scrap of truth in that report. I believe the report to be nonsense, and I am sure, therefore, that the Minister will welcome the opportunity to say that no such report is pending and that such proposals are not contemplated.
The second article refers specifically to the port of Liverpool again and states:The port of Liverpool will go bankrupt … unless it receives an injection of cash from the government.This is the stark truth contained in a secret report drawn up by the Mersey Docks and Harbour Board Company and the National Ports Council …Among the clutch of proposals is a plan to slash the number of registered dockers in the port by 30 per cent.—about 1,500 men—and cut white collar employees by about 16 per cent. over a two-year period.If those reports are false, the workers in the Liverpool docks and the community there are entitled to have them slapped down as hard and as quickly as possible. You, Mr. Deputy Speaker, know better than I from first-hand experience that Liverpool has gone through a sustained period of agony. If there is a crumb of truth in those reports, it can only add to that agony.
The Minister may not have the information with him to enable him to comment, but if he can find out as quickly as possible and assure my hon. Friends representing Merseyside constituencies, the dockers and the community in Liverpool. that there is no substance in the 1037 report, I shall be grateful. I repeat that we welcome the order and will give it our blessing.
§ Mr. Allan Roberts (Bootle)
I have the privilege to represent an area in which a good proportion of the Liverpool docks is situated. A lot of activity in those docks takes place in Bootle and not Liverpool. The containerisation at Sea-forth, which is a profitable part of the dock activities, is in my constituency, as is the profitable grain terminal. I speak, I hope, with the support of the Transport and General Workers Union employees who work in the docks in my constituency, many of whom also live there.
I, too, welcome the amazing conversion of the Government resulting from the action taken by the workers in the Merseyside docks in refusing to allow the employers to use a back-door method to make 170 men redundant. It is amazing to hear that public money will now be used to assist. On Wednesday 25 June 1980 I asked the Minister of Transport whether he would give financial assistance to the Mersey Docks and Harbour Company. He replied:I do not accept that costs incurred by harbour authorities should fall on the tax-payer."—[Official Report, 25 June 1980; Vol. 987, c. 184.]He may have avoided the strike threatened in the Summer Recess had he said then what has been said today.
I welcome the order as a small contribution towards helping solve the problems that the dock industry is facing, although it is too little too late. Much more needs to be done. The Minister said that the ability to borrow up to £30 million that is being given through the National Dock Labour Board will be for severance schemes only. I believe that loans should be given for other reasons to assist docks in decline in Merseyside and elsewhere.
In the past financial year the Mersey Docks and Harbour Company made a £7.5 million loss, including a £1.8 million deficit on its trading operations. Over the years it has paid out £20 million in redundancy payments to dock workers. Last year it paid £1.5 million to dockers for whom there was no work, although it also received £1.5 million. It is investing in the docks to try to move from labour-intensive to capital-intensive acti- 1038 vities at half the rate that such investment should be taking place if the company's future and that of the whole of Merseyside is to be secured. It believes that it should be investing between £10 million and £12 million and is investing only between £5 million and £6 million. If more money was made available, the investment programme could be stepped up and the docks, Merseyside and the country would prosper.
We cannot criticise the Mersey Docks and Harbour Company or the workers for not trying to do what they can within the limited finances available. The Liverpool register of dock workers has been reduced from 9,541 in 1972 to 5,186 at the end of March 1980, which is amazing. That has been done without conflict between management and unions. The unions have co-operated fully in shedding the labour that needed to be shed and modernisation has taken place where the capital was available. The reason why there is not more modernisation is that there is not enough capital.
It is interesting to note the management's view of the trade unions in the docks. Mr. James Fitzpatrick, the managing director and chief executive of the Mersey Docks and Harbour Company, said:I can't believe the dockworker is naturally militant. If he is not given security during a period of change he is going to find himself easily taken down the road by somebody who is going to cause a fracas.It is because security is lacking and because Government support has not been given to Merseyside that trouble has been created and we faced the threat of a dock strike.
We want the order to be taken further. We want the Government to give aid to the Docks and Harbour Company in the way that the Hamburg authorities and the West German Government give assistance to the port of Hamburg. The company has to dredge the estuary at its own expense. Services such as lighting, which are paid for by taxpayers and ratepayers in other countries have to be paid for by the company and that is reflected in its high costs for loading and unloading.
We want the fact that Merseyside has development area status to help the port. The docks and ports services are classed as service industries, and, although Merseyside has development area status.
1039 the 22 per cent. grants for new investment are not available for the port, which is the biggest industry in the area. Because the Government consider it to be a service industry it does not qualify for the grants.
We want more money from the EEC development fund. We have had £1.37 million from the EEC regional fund, but we want more and we want the Government to get back some of the British taxpayers' money so that it can be invested in Merseyside. We want about £20 million—that is the company's estimate—as a one-off grant to relieve the burden of voluntary severance payments, thereby releasing cash for essential investment and capital investment.
The interests of my constituents, those employed in the docks and the whole of Merseyside are related to activities in the port. The prosperity of Merseyside is dependent on the Government acting as they have in introducing the order, but in going much further to ensure that Merseyside has a future. If there is not an injection of State capital into Merseyside on a bigger scale than is proposed. the docks will die and the company will not be able to solve its problems. It is suffering considerably from the recession in world trade, the domestic recession and the changing pattern and nature of trade. If we want Merseyside to prosper and to be saved, the docks must be saved, and for that to happen the Government will have to be converted a little more than they have already been converted.
§ Mr. Mayhew
I am grateful for the welcome given to the order by the right hon. Member for Doncaster (Mr. Walker) and by the hon. Member for Bootle (Mr. Roberts).
The right hon. Member was entitled to his fun, and I am only sorry that there was such a small audience to share my enjoyment of it. However, I must tell him that there has been no lightning conversion of the Government as a result of the threatened dock strike on Merseyside. The need for an injection of severance financing by way of a loan was evident earlier in the year and the Government agreed to the full loan facilities requested by the industry. In consequence, we ran up against a statutory 1040 ceiling of £10 million, and we have to seek the authority of Parliament under the 1976 Act to go above that. We seek approval of the order simply to continue the Government's existing policies. The Government have to use the existing machinery to do their best to help the industry to shed surplus labour.
The right hon. Member for Doncaster asked what rate of interest would be charged on the loan. The interest payable will be calculated on a daily basis by the Treasury under section 5 of the National Loans Act 1968 at the lowest rate that would apply to a loan from the national loans fund of the same class and maturity, made on the date that the loan, or part of the loan, is taken out. That means that it will be charged at preferential rates. I cannot give the right hon. Gentleman the precise rate, but there will be an advantage compared with the rate that would be payable if the money were raised on the open market.
The right hon. Gentleman asked what amount was likely to be drawn if the estimate of 3,000 severances this year were fulfilled. That sum would be about £12 million. He said rightly that in an area of high unemployment a worker is motivated to put a high price on surrendering his job. That is a problem that the industry has come up against, and that led it to agree in September to increasing the maximum severance payment to £10,500.
I must dispute the charge of the hon. Member for Bootle of an amazing conversion. He suggested that taxpayers' money was being poured out of a cornucopia. As I indicated earlier, it is a loan and not a grant, and the whole amount that has been lent to the NDLB under this and preceding legislation has been repaid, with the exception of £200,000, which will be repayable shortly. The money is coming back to the taxpayer with interest, but we believe it right to help the board and, through it, the industry to finance the shedding of surplus labour without imposing unnecessary strains on port employers.
The right hon. Member for Doncaster asked me to comment on an article in the Journal of Commerce on 22 October, which suggested that there was a report that recommended the abolition of local dock labour boards. I am happy to give an assurance that the article represents 1041 a mine of inaccurate information. There is to my knowledge no truth in it, and no such report.
The right hon. Gentleman also asked whether a report had been made by the docks and harbour company about future prospects of the port of Liverpool. I understand that a report has today been furnished to my right hon. Friend the Minister of Transport by the company. I have not seen it, and I am not in a position to tell the House of its contents. There is a report that addresses itself to that matter, but I can tell the right hon. Gentleman no more than that. However, I think that he is likely to be more greatly concerned about the first report, which I categorically deny.
§ Mr. Allan Roberts
My hon. Friend the Member for Liverpool, Scotland Exchange (Mr. Parry) asked the Prime Minister on 31 July this year if she would meet a delegation of Merseyside Members and others to discuss the future of the docks and harbour company. The Prime Minister said that the company was carrying out a study, with the assistance of the National Ports Council, into the finances of the port, with the aim of drawing up a new profitability plan. She suggested that a meeting could successfully take place after that report had been prepared. Now that a report from the company is in the hands of the Minister of Transport, will the Under-Secretary undertake to facilitate a meeting?
§ Mr. Mayhew
I do not think that any facilitating by me of a meeting between the interests which the hon. Gentleman represents and the Prime Minister would be necessary. The Prime Minister gave an accurate answer at that time, as one might expect.
1042 The hon. Member asked whether the Government should make grants for a number of other objectives, all of them desirable, as anyone who has visited Merseyside recently, as I have done, would know. However, these are matters which are far outside the scope of this order. The Government are concerned here to extend a loan facility. They are not in the business of making grants, as has been made clear.
To conclude my remarks, I need only reiterate what I said at the outset. A substantial reduction in the number of registered dock workers has been made with the minimum of industrial disruption over the past 10 or more years. I acknowledge willingly what the right hon. Member for Doncaster said about the co-operation of the trade unions in bringing that about. It is always sad when a traditional industry is obliged by world forces and technological forces to contract, with a corresponding loss of jobs. I believe that it is right that everything should be done to bring about that contraction of jobs with as little hardship and with as much agreement as possible.
It is because the Government believe that in this context the machinery provided by the 1976 Act gives them a means of assisting the industry itself to bring about this contraction in a smooth way that it is right to make use of the maximum of £30 million by way of loan facilities which the 1976 Act affords.
It is for that reason that we bring forward this order, and I am pleased that it has the support of the opposition.
§ Question put and agreed to.
That the draft National Dock Labour Board (Increase of Loans Limit) Order 1980, which was laid before this House on 27th October, be approved.