HC Deb 13 November 1980 vol 992 cc622-40
The Minister of State, Department of Industry (Mr. Adam Butler)

With permission, Mr. Speaker, I shall make a statement on the finances of British Shipbuilders. In my statement of 31 July on British Shipbuilders' finances I told the House that the corporation was forecasting cash needs well in excess of its external financing limit and that the new chairman had been asked to carry out a review of prospects for the industry, including an examination of all possible ways of achieving savings.

As the House will know, merchant shipbuilding has been contracting ever since British Shipbuilders was formed. Since vesting day employment in merchant shipbuilding has fallen from 38,000 to below 18,000. In British Shipbuilders as a whole there have been about 17,000 redundancies. Despite this contraction and the economies that the chairman is introducing, I regret that the review has shown that there is no scope for significant reductions in the corporation's cash requirements this year. A substantial part of the cash requirement is due to the winding down of payments made in advance of work in progress on naval exports, and to the effects of the steel strike.

The Government have therefore agreed to increase British Shipbuilders' external financing limit for the current year from £120 million to £185 million. The additional resources are being found from the unallocated contingency reserve within the planned level of public expenditure. The chairman has also advised me that the corporation is likely to exceed by some £20 million its loss limit of £90 million before crediting intervention fund assistance.

The House's approval for the additional finance will be sought in the winter Supplementary Estimates; in the meantime should the corporation require additional funds these will be provided by repayable advances from the Contingencies Fund. The chairman expects a considerable improvement next year in British Shipbuilders' financial performance. The benefits of the restructuring programme, the economies that he is introducing, and the forecast higher utilisation of merchant shipbuilding capacity should be important contributory factors. This improvement will be reflected in the forthcoming external financing limit for 1981–82. The loss target will be reduced to £25 million after intervention fund assistance, which is equivalent to £75 million before that assistance.

However, there are uncertainties ahead, which could affect these forecasts for next year. The market for merchant shipbuilding and ship repair remains weak and British Shipbuilders continues to be unable to secure merchant ship orders without subsidy. The future level of naval orders has yet to be determined in the context of the Government's annual expenditure review. In these circumstances the Government have decided that it would be prudent to agree to the British Shipbuilders' request that the shipbuilding redundancy payments scheme should be prolonged. Enabling legislation to that end will be introduced shortly.

The Government accept that subsidies will, for the moment, continue to be necessary to enable British Shipbuilders to obtain merchant ship orders, but we believe, in line with other countries, that world-wide subsidies to shipbuilding must progressively reduce. We are therefore proposing to the European Commission the use of the remainder of the present £55 million tranche of intervention fund from the end of this year to July 1981, and a new tranche at a lower figure of £45 million from July 1981 to July 1982.

There are new opportunities available for the industry in offshore work if the corporation can prove itself competitive, but this is also a difficult market. I have invited the chairman to assess these and all other opportunities in a new corporate plan in spring 1981.

However, whether in offshore work or in the production of ships, there can be little doubt about the magnitude of the task facing the corporation. Only the most substantial and rapid improvements in productivity and efficiency, and in reducing overheads and other cost cutting, can give British Shipbuilders the prospect of a viable future. The Government believe that the necessary determination exists. It is up to all those in British Shipbuilders to translate that determination into achievement.

Mr. English

On a point of order, Mr. Speaker. When the right hon. Gentleman used the terms "contingency reserve" and "Contingencies Fund" he did not make plain that he was proposing to spend money without Parliament's authority. The contingency reserve is a mere accounting concept. The Contingencies Fund is the very body of money that has been criticised by the right hon. Member for Taunton (Mr. du Cann), the Public Accounts Committee, the Expenditure Committee of the last Parliament, the Procedure Committee and various other bodies. The purpose of the Contingencies Fund was to deal with such things as floods, storms and tempests. It was used to create nationalised industries, such as the British National Oil Corporation, before the House of Commons had approved of its creation. One would have thought that the Conservative Party would not lay itself open to such a charge.

May I ask you, Mr. Speaker, to forbid such a thing? We should debate the question of spending public money without the authority of the House.

Mr. Speaker

There will be a good opportunity for questioning now.

Mr. John Silkin

It is always agreeable to watch the process of education working its way through the minds of the Secretary of State for Industry and the Minister. That, at least, is something of a "Silkin" lining—[HON. MEMBERS: "Ah"] The phrase is not mine but that of one of the Minister's hon. Friends.

Does not the hon. Gentleman realise that for over a year British Shipbuilders and the Opposition have pointed out that the cash limit of £120 million for 1980–81 would prove impossible and unworkable? The Minister has spoken of a cash limit of £185 million—the exact figure that British Shipbuilders asked for more than a year ago.

Does not the Minister realise that, given the delay in producing this cash limit and given the fact that he refuses to say what will be necessary for 1981–82. British Shipbuilders is in an intolerable position? This year it has been denied the opportunity to plan its production, as it should do. As the Minister will not say what will happen next year, medium-term planning is impossible. British Shipbuilders will have what the CBI might call a hand-to-mouth existence. At least I agree with the CBI about that.

Is not the difficulty the fact that the Government's industrial policy is falling down about their ears? For example, 60 per cent. of the value of any ship comes not from work in the shipyards but from the engineering industry. We are witnessing the biggest decline in our engineering industry for half a century. That is the Government's responsibility. Even in this limited area the Government are neglecting opportunities.

It is over a year since the Minister told the House—

Mr. Eldon Griffiths


Mr. Silkin

The Minister made a long statement, of more than four pages. I have the right to reply. I have almost finished my remarks, but I shall take much longer if the hon. Gentleman continues to interrupt from his usual sedentary position.

First, over a year ago the Minister told the House that he would—personally, I believe—encourage public sector ordering. What has happened to that? It is one of the problems that British Shipbuilders face. Secondly, towards the end of his statement he said: Only the most substantial and rapid improvements in productivity and efficiency … can give British Shipbuilders the prospect of a viable future. Is not the hon. Gentleman aware that the last three vessels launched were all launched ahead of schedule and within the budget? Is it not about time the Minister put his trust in industry and in British Shipbuilders, instead of trying to stop and stall it at every possible turn?

Finally, I should like to refer to offshore activity and to the fact that BP is supposed to be ordering f100 million of oil rigs from the Far East. Is not part of the difficulty—if not a major difficulty—the fact that our exchange rate is overvalued? Is that not the Government's responsibility? Is it not a fact that during the past year or so Japanese shipbuilding has seen a great upturn, whereas ours has been decreasing? Is it not a fact that the rate against the yen has increased by 45 per cent? Is it not time that the Government dealt with that problem as well?

Mr. Butler

I find it difficult to understand the right hon. Gentleman when he suggests that we are causing British Shipbuilders to live a hand-to-mouth existence. Eighteen months ago I announced a two-year programme of support for the industry. Six months before that runs out, I am announcing a further one-year programme of support, which should allow the corporation to plan ahead in the way that it wants.

With regard to public sector ordering, I have made it clear to the House before that there are very limited opportunities for orders, apart from naval orders although some have been brought forward. However, naval orders this year have been 22 per cent. above those for last year. Future orders are not a matter for my Department.

The right hon. Gentleman mentioned early launching. I am delighted about early launching. There was an announcement this morning about the early launching at Govan. It is by bringing ships forward on time or meeting schedule dates ahead of time that the corporation will get further orders. I hope that British shipowners and shipowners world-wide will note that considerable improvement.

With regard to the exchange rate, in the first half of this year, despite a high exchange rate, the corporation was able to improve its share of orders taken from 3 per cent. to 5 per cent., which again is a commendable effort.

Mr. Silkin

Would the Minister of State like to correct one of his answers? In his statement he says: The Government have therefore agreed to increase British Shipbuilders' external financing limit for the current year from £120 million to £185 million. It is not for the year ahead.

Mr. Butler

I also announced, as the right hon. Gentleman and the House will be aware, the loss limit for next year and the intervention fund tranche that we propose should be available to British Shipbuilders through to July 1982. If the corporation is not able to take guidance from that, I shall be surprised.

Mr. Cyril Smith

I in no way disagree with the substance of the statement about the amount of extra money to be made available to British Shipbuilders, but can the Minister tell me when the U-turn is not a U-turn?

Mr. Butler

I do not believe that the hon. Gentleman takes part in our shipbuilding debates very often. As I have just said, in July 1979 I announced a programme of support. I am now announcing a continuing programme of support at a declining subsidy level.

Mr. Grylls

Does my hon. Friend agree that the extra £65 million that he has announced today for British Shipbuilders—a 50 per cent. increase—is a serious increase in public expenditure and is worrying in the light of what the Government are trying to do? Does he further agree that what he has told the House today highlights one of the problems of British Shipbuilders—that the corporation has totally failed since nationalisation to obtain any significant foreign naval orders, and that the last two orders—from Saudi Arabia and Kuwait—have gone respectively to France and Germany, which should be of great concern to the Minister and the House? What does my hon. Friend propose to try to ensure that the corporation is more successful in that area?

Mr. Butler

I am grateful to my hon. Friend for allowing me to identify two reasons why the financial limit has had to be extended. First, the steel strike cost British Shipbuilders directly £14 million and created other indirect costs. A further £25 million or so was due to the rundown in the deposits on naval orders. Because British Shipbuilders has not got further naval orders, those deposits have not been replaced. That is one of the main reasons for the additional cash requirement. The corporation's new chairman is determined to win orders overseas—merchant shipbuilding and naval. I believe that if anybody can do it he can.

Mr. John Evans

Does the Minister accept that his announcement only highlights the incompetence of his Department, the Secretary of State and himself? Is he aware that the cash limit that he earlier announced for the industry was utterly unrealistic and that everyone who knows the industry was aware of that and knew that he would have to come forward with a massive increase? Does he not realise that the shipbuilding industry needs to plan between two and five years ahead and that the corporate plan must cover that period? Does he not accept that there must be a Government commitment to supply the necessary finance in such areas of high unemployment? Is he not aware that in addition to the 17,000 who have been made redundant in the industry there are massive further redundancies in industries supplying shipbuilding? Is he aware that we shall not believe that the Government are committed to retaining a British shipbuilding industry until they provide the necessary finance? When will they do that?

Mr. Butler

Our continuing support completely refutes the hon. Gentleman's last point. We have demonstrated that we are prepared to give the industry a chance to bring itself into a viable condition. We are putting very considerable, sums of taxpayers' money behind the industry at the expense of other industries and of jobs elsewhere.

Mr. Emery

Will my hon. Friend tell the House exactly how much money from the Exchequer, after the £65 million has been paid, will have been put into British shipbuilding? In addition, what will have been given from the Exchequer to purchasing companies in support of their orders? Can he give us the total?

Mr. Butler

I cannot give my hon. Friend an exact figure. If he cares to put down a question, I shall supply the figures. The total runs to hundreds of millions of pounds.

Mr. Molyneaux

As the Minister has responded to requests for the retention of the shipbuilding redundancy payments scheme, can he assure us that similar requests will be met with equal sympathy? Will he ensure that Harland and Wolff will be given the opportunity to participate in offshore and defence work orders?

Mr. Butler

The position of orders for Harland and Wolff is not for the Department of Industry. It cannot announce policies for that company.

The practice in regard to the redundancy payments scheme has been that any changes made have related to Northern Ireland. I feel sure that I can assure the hon. Gentleman that the new scheme will apply equally to Northern Ireland.

Mr. Nelson

Will my hon. Friend accept that many of us on the Government Benches warmly support his announcement about the extension of the redundancy payments scheme and take a long-term view of British Shipbuilders? We wish to see it prosper, survive and be supported in the meantime. In considering positive proposals for the future, will my hon. Friend accept that there is an alternative merely to subsidising the capital cost of shipbuilding and providing subsidy from the taxpayer to write off losses and that an important factor for prospective purchasers is the terms of finance? While they are already able to obtain finance preferentially through the Ship Mortgage Finance Company Limited, I believe at 7 per cent., what consideration is he giving now, and what consideration will he give in the future, to improving the rate of interest that prospective purchasers will have to pay?

Mr. Butler

My hon. Friend will know that the export credit terms were increased in line with the OECD understanding last year. As for home sales, the home credit scheme has been working very effectively.

Mr. Gordon Wilson

First will the Minister say to what extent an element exists within the new funding for a continuation of shipbuilding at the Robb Caledon shipyard in Dundee, and for how long it will continue? Secondly, is he not concerned about the prospective loss of drilling rig orders for the yard on the lower Clyde? What proposals does he have to improve incentives to bring those orders to a Scottish shipyard?

Mr. Butler

The question about Robb Caledon, as with any other individual yard, is for the chairman of British Shipbuilders. The hon. Gentleman will be aware of the recent discussions and representations. With regard to rig building on the lower Clyde, as I said in my statement, the corporation believes that there is considerable potential in the North Sea and is confident that it can get orders for rigs in the normal commercial way.

Sir Albert Costain

Can my hon. Friend say how much extra cash is required because of the enormous losses made on the Polish ships order which was announced by the right hon. Member for Huyton (Sir. H. Wilson) with such a fanfare of trumpets? Has my hon. Friend taken into account that we now have a Prime Minister who puts the national interest before political expediency?

Mr. Butler

The Polish order does not account for any great part of the extra cash required for this year, but the loss of £40 million on top of massive subsidies clearly damaged the cash position of British Shipbuilders.

Dr. J. Dickson Mabon

In view of the last part of the Minister's statement concerning the high technology offshore industry and his acknowledgment of the excellence of British participation in that industry through dynamically positioned ships and other apparatus for the North Sea, does not the hon. Gentleman recognise that with reference to the specific argument about the purchase of semi-submersibles by BP—one order has already gone to Korea—we shall see on the second order—the hon. Member for Chichester (Mr. Nelson) has referred to the matter and the Minister's reply to the hon. Member for Dundee, East (Mr. Wilson) is not in line with our understanding—that with the Japanese offering better terms, when, on no other ground are they superior to British industry? Is it not disgraceful that the Government have not changed that position so that we are able equally to beat the Japanese at their own game?

Mr. Butler

There have been reports about BP placing orders in Korea, but I understand that no formal announcement has been made. I know that the chairman of British Shipbuilders is fighting as hard as he can to win an order and future orders in this important area.

Mr. Eldon Griffiths

In view of the fiasco over the Polish ships order, the loss of a $1 billion order from Saudi Arabia to the French and our apparent inability to compete on many, if not all, offshore oil rigs, what reason does my hon. Friend have for telling us that next year will be better than last year? A great deal of additional public money is being pushed into public sector losses. How long can any Government continue to subsidise a nationalised flop of this sort?

Mr. Butler

My hon. Friend's view is shared by many, if not all, my hon. Friends. It is not tolerable that the public should be asked to go on subsidising an industry ad infinitum. The policy of the Government is to give the industry an opportunity to get itself straight. My hon. Friend asked what prospects there were of that. The new chairman has already shown his mettle in effecting economies in the running of the business. I believe that there is considerable prospect of his being able, with the help of the unions, to bring about the increases in productivity and efficiency which are necessary. If they are not forthcoming, there is not, as I have said many times, a future for British Shipbuilders.

Mr. Dixon

Does the Minister realise that it costs more public money to put a shipyard worker on the dole than to keep him in work? Does he accept that if there is any further rundown of manpower in the industry it will hit areas such as the Tyne which already have high unemployment rates? Is he aware that my constituency has over 18 per cent. male unemployment, with 50 per cent. of those involved having been on the dole for six months or more? Does the hon. Gentleman realise that in the 18 months since the Government took office there have been more men and women thrown out of work in my constituency than there were in the 18 months before the Jarrow march in 1936? Fourty-four per cent. of my constituents are on rent rebates and 43 per cent. of schoolchildren receive free school meals. Will the hon. Gentleman have a word with his right hon. Friend the Secretary of State for the Environment, who is already cutting public expenditure, which will hit constituencies such as mine?

Mr. Butler

I can assure the hon. Gentleman that that sort of consideration is taken into account when we decide what support to give British Shipbuilders. Of course, he is right in saying that Jarrow, the lower Clyde and similar areas have high levels of unemployment. However, I must remind the hon. Gentleman of what was said during Prime Minister's Question Time, when my right hon. Friend was reminded of what CBI leaders have said. One reason why we shall have to continue with interest rates at a high level is the subsidies that are having to go into the public sector.

Mr. Thornton

On the question of naval orders, I am sure that my hon. Friend is aware that there has been no major warship sale since 1977. Does he agree that there is urgent need for discussions between British Shipbuilders and the naval chiefs of staff that may help to remedy the situation and save yards such as Cammell Laird?

Mr. Butler

Yes, and I hope that my hon. Friend will continue to make that point.

Mr. Field

Will the hon. Gentleman say more about the expected employment levels in the industry over the next year? When British Shipbuilders was consulting the Minister over the level of financial support for the coming 12 months it presumably gave him projections of the size of the work force. Will the hon. Gentleman give those projections to the House? Will he also comment on how sensible it is for an industry in which it takes many years to build a ship to have financial statements lasting for only a year? Is he aware that in my constituency Cammell Laird is building in four years a Type 42 frigate which should be built in five years, but that as a result of building it in four years problems have been caused to the Ministry of Defence in making payments out of this year's budget and some men may be laid off?

Mr. Butler

I am aware of the position at Cammell Laird and of the achievement in building the frigate. I remind the hon. Gentleman that one of the main reasons why it was completed ahead of time was that it was built in a covered yard provided by funds from a previous Conservative Government. As for employment levels in the industry, the historic facts speak for themselves, and I cannot give any forecast of future employment levels.

Several Hon. Members


Mr. Speaker

Order. I must tell the House that I have a long list of right hon. and hon. Members who hope to participate in the main debate. I also have notice of three Standing Order No. 9 applications. Therefore, I hope that hon. Members will ask brief questions. I may be able to call all those who wish to question the Minister, but I am not sure that that will be possible.

Mr. Trotter

Does my hon. Friend accept that he has shown the Government's trust in the industry by the further funding of £185 million? Does he also accept that there is a problem for the industry throughout Western Europe which is meeting competition from places such as Korea, where workers are working 60 or more hours a week for about half the wages that are paid in this country? Does my hon. Friend accept that there has to be a united effort by the countries of Western Europe if that competition is to be dealt with?

Mr. Butler

This matter has received some publicity. The House will know that the share of orders of different countries is kept under review by the OECD. I know that in the case of Japan—I cannot speak of South Korea—the increase in its share of the market has been reported to the OECD and is being kept under review. My hon. Friend has raised a point which will remain with us for some while.

Mr. Robert C. Brown

Will the hon. Gentleman point out to his hon. Friends below the Gangway that the British shipbuilding industry was receiving massive subsidies from the Government when it was in private hands, long before nationalisation? Will he reflect on what has been said about naval orders and bear in mind that any attempt to sell the naval shipbuilding yards would be the death knell for Swan Hunter and other yards on Tyneside which my hon. Friend the Member for Jarrow (Mr. Dixon) referred to?

Mr. Butler

The industry in private hands had some remarkable achievements. It is right that in recent years some public money was put in. As for the future of the warship yards and the Government's policy of introducing private capital into the shipbuilding industry, I can tell the hon. Gentleman that the policy remains that we shall do so at the first appropriate moment.

Mr. Kenneth Carlisle

As my hon. Friend says, much greater productivity is required if British Shipbuilders is ever to be viable. What evidence is there of greater productivity? Surely we need clear evidence, rather than hopes, that this is happening if we are to commit more public money.

Mr. Butler

Various productivity schemes are now in operation in the yards, and there is some evidence that they are beginning to bear fruit.

Mr. R. C. Mitchell

In his discussions with British Shipbuilders about future planning, does the Minister estimate that there will be an increase or a decrease in future British naval shipbuilding orders?

Mr. Butler

There is a better chance of an increase in British naval orders under the present Government than there would be under a party that has just voted for unilateral disarmament.

Mr. Kilfedder

In view of the rapid deindustrialisation of Northern Ireland and the unprecedented, agonising and ever-increasing unemployment in the Province, including the loss of jobs in the Belfast shipyard, will the Minister give an assurance that the Government are not set on a course of weakening the Ulster economy beyond repair? He can do that by making sure that the Belfast shipyard survives as a shipyard and not as a manufacturer of domestic appliances.

Mr. Butler

I should like to give my hon. Friend such an assurance, but he knows that Northern Ireland is not my responsibility.

Mr. Douglas

Will the hon. Gentleman tell the House the degree of his Department's involvement in the offshore oil market, particularly for semi-submersible rigs? To what degree was it involved in the latest order that the Ben Line placed in Korea? How much is it involved, albeit to support its "Buy British" campaign, in ensuring that British Petroleum will place its second order in the United Kingdom rather than in Korea? This is a very important matter, because the day rate for rigs is rising dramatically. I do not want to anticipate the rate, but it might rise to $100,000 a day. Therefore, the nation will be paying across the exchanges to foreign companies for foreign-built rigs to carry out activity in our own North Sea. No other nation would behave so stupidly.

Mr. Butler

The hon. Gentleman is a member of a party that believes in directing private companies to do things that would be against their better commercial interests.

Mr. Douglas

These are national interests.

Mr. Butler

British Shipbuilders must win orders on its merits. I believe that it is capable of doing so.

Mr. Bruce-Gardyne

In the medium-term Financial Statement published at the time of the Budget it was stated that there should be a turn-round of £2,500 million in the financing of the nationalised industries between 1979 and 1984. It was subsequently indicated that British Shipbuilders would play a major part in achieving that turn-round. Does that remain the intention of the Government in general and of the Department of Industry in particular?

Mr. Butler

Certainly the intention of the Government as a whole and of my Department is that British Shipbuilders shall make its contribution. The fact is that what I have announced today is a backward step.

Dr. David Clark

The Minister correctly pointed out that British Shipbuilders had difficulty in attracting merchant ship orders without a subsidy. Will he confirm that every one of our EEC competitors gives subsidies at least as great as ours? When the hon. Gentleman announces support in successive years for attracting orders, will that he done in conjunction with our EEC partners, or is British industry to be put out on a limb, and at risk?

Mr. Butler

Whilst our EEC partners subsidise either their shipbuilders or their ship owners, there is no evidence that they are doing so to a greater extent overall than we are. Evidence of our ability to compete with the other European industries is in the figures that I have already given—that in the first half of this year we increased our share of the world market and the other EEC countries reduced theirs.

Mr. Bill Walker

Does my hon. Friend agree that the Government's action in increasing the funds available to British shipyards destroys the myth that is being spread around that the Government are out to destroy the shipyards of Britain and, in particular, those of Scotland? Does he also agree that if there were a more responsible attitude from the Opposition towards defence expenditure, Scotland, which depends so much on defence expenditure, would benefit much more?

Mr. Butler

I agree on all three counts.

Several Hon. Members


Mr. Speaker

I do not propose to call those hon. Members who have only just started rising. It is not fair to the House.

Mr. Robert Hughes

In successive statements the Minister has repeatedly spoken of the need for increased productivity, and he has often referred to good industrial relations. Does he accept that he would do much more good for British Shipbuilders if he emphasised the great increase in productivity and the big improvement in industrial relations that have already taken place? It is the yards that have made the best increase in productivity that now face redundancies. What will the Government do to encourage both British Shipbuilders and particular shipyards by placing Government orders as soon as possible?

Mr. Butler

I am happy again to pay tribute to the improvement in industrial relations. It is true that there has been an improvement, and it continues. It is not correct that there have been improvements in productivity, partly because of under-utilisation of capacity. My view about scope for an improvement in productivity is very much shared by the unions.

Mr. Lee

What instruction has my hon. Friend given the chairman of British Shipbuilders about the possible disposal of assets, with a view to improving productivity?

Mr. Butler

I am not statutorily able to order the chairman of British Shipbuilders to dispose of assets, but I have made it clear to him that I expect him to raise some of his funds from the disposal of assets. I know that to be his intention, so far as his statutory duties allow.

Mr. Dewar

In view of the widespread understanding that the first BP semi-submersible rig order is going to Korea and the known fact that Ben Line has ordered a similar vessel from Korea, will the Minister explain on what he bases his confidence that British Shipbuilders will be able to secure the second BP order? For the credibility of British Shipbuilders in the offshore field, it is essential that that second order comes to it. Will the hon. Gentleman please repeat—because I could hardly believe my ears—what I gathered from his earlier remarks, namely, that British Shipbuilders does not wish to have Government help in an attempt to bridge the gap between foreign ordering prices and our own?

Mr. Butler

I shall check Hansard, as the hon. Gentleman will. I do not believe that I said what he suggested. I do not know whether British Ship-builders will secure the BP order. I believe that it has very good prospects of doing so. It would help enormously in its future sales efforts.

Mr. Budgen

Does my hon. Friend agree that it is now clear that his Department will far exceed the expenditure planned in the public expenditure White Paper, published at the time of the Budget? In particular, expenditure by the taxpayer on steel, aerospace and shipbuilding will this year far exceed £191 million. That figure cannot possibly be reduced to £80 million in the next financial year, nor is it likely to be reduced to £20 million in the financial year after that.

Mr. Butler

I share my hon. Friend's concern about the necessity to spend money in this way.

Mr. English

May I apologise to you, Mr. Speaker, for inadvertently referring earlier to "the right hon. Gentleman" I understand that I should have described the Minister as "the hon. Gentleman" That makes my point. Why was not a Cabinet Minister delegated with the duty of announcing that the Government are proposing to spend a large part of the subsidy out of moneys not approved by the House, either before or subsequently?

Will the hon. Gentleman please explain to us, as a former Parliamentary Private Secretary to the present Prime Minister, why he is given the job of announcing that the Government are doing this on their own authority out of moneys that will not be subjected to parliamentary approval? That is exactly what was criticised in the previous Parliament by his own party.

Mr. Butler

First, the hon. Gentleman should be aware that during the present Parliament I have made all the statements on British Shipbuilders' finances, as the Minister of State with prime responsibility for shipbuilding. As to the announcement this afternoon and the additional money, I am informed that that is entirely following normal procedure.

Mr. English

On a point of order Mr. Speaker. That must not be allowed to go.

Mr. Speaker

Order. I am afraid that it will. The Minister is responsible for his own reply.

Mr. Marlow

Excluding the cost of redundancy payments, will my hon. Friend be kind enough to tell the House how much public money, in the form of any subsidy whatever, including money from Europe—because if that is not spent on this, according to the terms of the agreement with the Prime Minister it can be spent on something else—is being spent this year in British Shipbuilders per person currently employed in British Shipbuilders'? If my hon. Friend does not have those figures at his fingertips, perhaps he would be kind enough to give an estimate, or even an answer in the Official Report.

Further, will my hon. Friend tell us what the chairman of British Shipbuilders said last year about this year, and in the event what happened, and, therefore, why we should pay a lot of attention to what the chairman of British Shipbuilders says this year about next year?

Mr. Butler

I do not have the figures immediately at my fingertips. I should be delighted to let my hon. Friend have them. As I have already said in answer to one of my hon. Friends, the amount of money that has been put into British Shipbuilders in recent years has run to many hundreds of millions of pounds. Indeed, the Select Committee—the Public Accounts Committee, I think—drew attention to the fact that the figure of support was equal to, if not in excess of the wages per head of each employee.

Concerning my confidence in the new chairman, he has so far shown, in the few months for which he has had that responsibility, that he is capable of bringing this industry round, and I give him all support and wish him well.

Dr. John Cunningham

Since it is widely believed among shipbuilders throughout the world that an upturn is now coming in likely orders for vessels, surface vessels and rigs, and the like, is not the real problem for British Shipbuilders, contrary to what the hon. Member for Northampton, North (Mr. Marlow) suggests, that it does not have enough money to invest per capita, because most of the money that is being spent is simply going down the drain in closure expenditure and redundancy payments? Is not the whole basis of the capital programme of British Shipbuilders totally inadequate to help it meet the challenge that the Minister is suggesting it should meet?

Will the Minister explain how British Shipbuilders can improve productivity when it does not have orders? Is it not the case that no Norwegian rigs and no rigs working in the Mexican Gulf are built in the Far East? What has been the purpose of British Shipbuilders improving its technical competence and its capability to produce highly sophisticated vessels for the British sector of the North Sea if the level of sterling and—as the hon. Member for Chichester (Mr. Nelson) rightly says—the financial provisions from Japan and Korea are such as to make orders in British yards wholly unattractive to British companies? Are not the Government responsible for all these things, in some measure?

Mr. Butler

I am delighted if the hon. Gentleman is right in assuming that there is an upturn round the corner. My own view is that that is not likely to be the case in the immediate future, but it remains to be seen. The capital programme will continue at more or less the present level.

The hon. Gentleman asked how productivity can be improved if British Shipbuilders do not have orders. The fact is that it does have orders at present, and it has continuity. It is necessary, of course, that it continues—[Interruption.] It is necessary that British Shipbuilders follow up that very successful order position in the first half of this year with a further batch.

As for competition with the Far East, I believe that what the Government are doing is a proper use of public money, but I cannot envisage further sums being available in the way that the hon. Gentleman might wish.

Dr. Cunningham

We cannot accept that. Scott Lithgow does not have continuity of ordering. Scott Lithgow is now building the most sophisticated offshore vessel that is being built anywhere in the world, but it does not have a subsequent order. Cammell Laird does not have any continuity of orders for offshore vessels, either. For the Minister of State to tell the House that continuity exists is grossly to mislead the House. He must know that that is not true.

This is the whole problem facing British Shipbuilders. It cannot possibly improve productivity without such continuity, and there is little sign of the Government doing anything to help it to get it.

Mr. Butler

The problem with the hon. Gentleman's first question was that he shifted his ground. I apologise to him for the fact that when he talked about orders I thought that he was referring to merchant shipbuilding, to which my answer referred. It is quite right that in terms of offshore orders there is not continuity. That is why the hon. Member's hon. Friends and my hon. Friends know the importance of getting this BP order.

Several Hon. Members


Mr. Speaker

Order. I propose to call those hon. Members making applications under Standing Order No. 9 in the order in which the applications were received.