Shipbuilding Bill

HC Deb 17 November 1981 vol 13 cc166-217

Order for Second Reading read.

3.38 pm

The Minister of State, Department of Industry (Mr. Norman Lamont)

I beg to move, That the Bill be now read a Second time.

This is the second Shipbuilding Bill to come before this Parliament. In the period since the last Bill, the industry has been through traumatic developments worldwide. It has also been a period of difficult adjustment in the United Kingdom industry. As I shall hope to show the House, there are reasons for believing that the painful adjustments of the last two years have also secured some gains and the prospect of further ones.

The Bill has two purposes. The first, as with the previous Bill, is to raise the limit on the amounts which British Shipbuilders and its wholly owned subsidiaries may borrow in the form of loans, or receive by way of public dividend capital. The present borrowing limit for British Shipbuilders under the Shipbuilding Act 1979 is £500 million, which may be raised by order, subject to the approval of the House, to £600 million. An order has been laid before the House in draft and is to be considered after this debate.

Under the Bill, the limit on borrowing is raised to £700 million, with provision for a further increase to £800 million by order. Those hon. Members who follow such matters will recall that that compares with the £300 million limit under the Aircraft and Shipbuilding Industries Act 1977, which the House was told at the time of nationalisation would be sufficient to last until 1982. I shall, of course, wish to comment later on the financial record of British Shipbuilders.

The total borrowing that counts against the limit was, at the end of British Shipbuilders' financial year in March, £408 million. British Shipbuilders expects that by the end of the year that might amount to £500 million. But at the same time it is necessary to ensure that any temporary fluctuations can be accommodated within the statutory limit and for that reason an order increasing the limit to £600 million—in addition to the Bill—has been laid before the House.

The Bill's second purpose is to provide for the prolongation by order subject to affirmative resolution of the shipbuilding redundancy payments schemes for Great Britain and Northern Ireland for two years beyond June 1983. The existing powers for the prolongation to June 1983 were passed under the Industry Act only last Session and I am sure that both sides of the House will regret that there appears to be any need for further prolongation beyond June 1983.

Before any alarmist statements are made, I should emphasise that there is no immediate need for the legislation to be introduced. The period of the scheme extends until the middle of 1983, but any power to extend it would have had to be taken either in the next Session or in this Session. This measure seemed a convenient vehicle. I should also emphasise that we are not extending the powers but merely taking the power to do so. To extend the powers we would have to come before the House and table an order, which the House would then have an opportunity to debate.

The reason for the present provision is the forecast in the White Paper on the defence programme that job opportunities in surface warship building will inevitably decline compared with current levels. It is not possible at this stage to give any detailed forecast of the job implications. The present naval workload in British Shipbuilders extends some years ahead, which gives time for adjustment where possible. The defence review also gives opportunities to British Shipbuilders and to Vickers, for example, in the construction of submarines. British Shipbuilders is also anxious to increase naval exports and its efforts in that direction are a factor that will have to be taken into account.

Mr. Dick Douglas (Dunfermline)

I am grateful to the Minister for having given way so early in his speech. Was he in the House when the Prime Minister implied that there might be a reappraisal of the Trident programme because of the difficulties and changes taking place in the United States of America? What effect will such delays have on the United Kingdom's naval yards?

Mr. Lamont

I cannot say at present. However, as I have suggested, there are uncertainties on the naval defence side and the Secretary of State will make the position clear to the House in due course.

Before moving on to the general outlook for British Shipbuilders, I should comment on the absence in the Bill of proposals for privatisation. I am aware that that will be a disappointment to my hon. Friends who believe, as I do, that private enterprise offers a better hope for jobs and prosperity than public ownership. I can assure my hon. Friends that it is the Government's aim—time permitting—to take powers during this Parliament to facilitate private investment in British Shipbuilders.

My hon. Friends will want to know to what extent the Government's policy of reducing subsidies to the industry is succeeding and what the prospects are. They will also want to hear something about British Shipbuilders' corporate plan.

Mr. Don Dixon (Jarrow)

Before the Minister moves on to the general points, will he explain why there is a difference in clause 2 between the redundancy payments paid to shipyard workers, those paid to steel workers and those paid to miners?

Mr. Lamont

I understand that the hon. Gentleman is talking about workers who are covered by different schemes. There is no reason why they should be the same. However, the hon. Gentleman may choose to raise that point in Committee. At the conclusion of the debate my hon. Friend the Under-Secretary may reply to the hon. Gentleman, but the hon. Gentleman's remarks do not have great force because those workers are covered by separate schemes and separate pieces of legislation.

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

As regards privatisation, Ministers' earlier announcements have been of two different types. The first proposal was that there should be direct investment in yards, such as Yarrows and in one or two naval shipbuilders. The second proposal was that there should be an equity holding in British Shipbuilders. Which proposal do the Government favour?

Mr. Lamont

The Government are not making any decision at present on either option. I said only that the Government would take powers, if the time were available, to remove the obstacles. Various statutory obstacles prevent privatisation in either of the ways that the right hon. Gentleman referred to. However, no decision has been made about either route.

I said that the House would want to know to what extent the policy of reducing subsidies was being successful. The external financing limit and British Shipbuilders' trading losses before tax are in many ways the best indicators of progress. In 1979–80 the external financing limit that we inherited from the previous Government was £250 million. For 1981–82, the limit is £150 million. The limit for 1982–83 is likely to be lower than that. British Shipbuilders' trading losses before intervention fund assistance have also steadily declined. In 1979–80 they were £174 million and in 1980–81 they were £85 million. For this year, the target losses should be marginally lower. Those improvements have been secured at a time when the intervention fund has also been diminishing. The intervention fund tranches in 1979–80, 1980–81, and from July 1981 are £65 million, £55 million and £45 million respectively. Therefore, subsidies have been and are being reduced.

While the performance of British Shipbuilders has improved, total losses since vesting day amount to £341 million after tax, interest and extraordinary items. Most of the £400 million advanced to British Shipbuilders so far has gone towards meeting losses. No one could say that Governments have not supported British Shipbuilders. The total amount of support paid by way of public dividend capital, intervention fund and redundancy payments reached £500 million by March 1981. As these figures show, the overall financial record of British Shipbuilders since nationalisation has been disappointing. However, the recent figures demonstrate a large improvement.

I know that the chairman and his board are determined that this improvement should continue and that the dependence on the taxpayer should be further reduced. Part of the recent improvement is related to improvements in the world market. Supply and demand have been brought more into balance, partly as a result of capacity reductions. World output has decreased from 16.5 million compensated gross registered tonnes in 1978 to 12.6 million compensated gross registered tonnes last year. The reduction in capacity has taken place worldwide. At the same time, world new orders have increased from 10.8 million compensated gross registered tonnes in 1978 to 14.4 million in 1980. While most commentators would describe the recovery as hesitant and modest, it has had the effect at least that British Shipbuilders is no longer struggling quite so much with the problem of getting sufficient orders. While British Shipbuilders has had the benefit of an improving market, a large part of the improvement has been due to its own efforts and the benefits of restructuring.

A major factor has been the commercial approach under the chairman of British Shipbuilders, Mr. Atkinson, who came to the job some 18 months ago. The financial control and accountability of British Shipbuilders have been increased by his reorganisation of the corporation into five operating divisions. Steps have been taken to strengthen marketing, both on merchant ships and warships. The offshore division has been established, and the House will know that an important order has just been secured.

I should like to pay tribute to the trade union side for its contribution to the improvements. A total of 19,000 employees have left British Shipbuilders at a cost to the Exchequer of £55 million under the shipbuilding redundancy scheme. This shows the scale of the restructuring, and no one would underestimate the strain that this has imposed on many areas that already have above average levels of unemployment.

Mr. Gordon Wilson (Dundee, East)

The Minister has rightly paid tribute to the amount of help that has been given to redundant shipbuilding workers. Has he spared a thought for the situation in those areas where no jobs are available for unemployed shipbuilding workers and where there is no question of relocation because of the distance from other yards?

Is it not time that British Shipbuilders endeavoured to keep yards open now that orders are becoming available and there is no prospect of alternative jobs? Alternatively, should not British shipbuilders be given an obligation in other legislation for certain social and economic responsibilities for workers in areas that are experiencing tremendous problems? I draw the hon. Gentleman's attention in particular to the steel industry's obligation to steel workers who unfortunately have been made redundant.

Mr. Lamont

I do not agree with the hon. Gentleman. Decisions about yards must be for the commercial judgment of the board, and it should take those decisions on commercial grounds. As the hon. Gentleman said, there are certain areas where this poses great problems, but that is an argument in favour of redundancy payment schemes of the kind that we are discussing. It is an argument in favour of sharpening regional policy in the way that we have done, so that more aid goes to areas of highest unemployment.

On present trends of orders, I expect British Shipbuilders to be able to make a further improvement in its financial performance. The external financing limit for 1982–83 will be lower than the present limit of £150 million. Within the lower external financing limit there will also be increased provision for capital expenditure so that financial retrenchment is combined with provision for the future. It is not all retreat.

Formidable problems lie ahead. British Shipbuilders are a long way from viability. While the intervention fund has secured orders to keep most yards in business up to the end of 1982, and several well into 1983, the cost of the fund remains high. Currently, the level of intervention fund subsidy, while lower than two years ago, is still approaching £3,500 per man year of work. Although the productivity of British Shipbuilders is improving, the overall level is still worrying.

Hon. Members will know that productivity is notoriously difficult to measure in an industry such as shipbuilding. There is the problem of comparing like with like, such as that part of the work that is subcontracted outside the main business. It is also difficult to distinguish between real improvements in productivity and changes in the capacity loading of yards. With those qualifications, the latest figures for throughput per employee in merchant yards are 15.3 compensated gross registered tonnes a year in 1978, 13.2 in 1979 and 15 in 1980. Thus, while there was a dip in 1979, there was a rise last year with better order books. However, British Shipbuilders must still surpass the levels that existed before nationalisation.

I know that the corporation is making an intensive effort to improve productivity. Each yard must meet a detailed programme. They have set themselves a target of 5 per cent. improvement this year and a 10 per cent. improvement next year. We must hope that these efforts will be successful. Increases in productivity are absolutely essential for the industry's competitiveness as well as its future.

The behaviour of the market and the prices available will be heavily influenced by the actions of Japan, which has been referred to by an hon. Member. So far, developments are disquieting. Although the market recovery has been modest, Japan has increased its share of new orders taken by the OECD from the 50 per cent. prevailing at the height of the shipbuilding recession two years ago to more than 60 per cent. today. We and other Community countries have made known in OECD our deep concern at the trend of Japanese orders.

Hon. Members will recall that the intervention fund was originally introduced to avoid a collapse of the industry against Far Eastern competition. I hope that Japanese shipbuilders will see that in a world where the forces for protectionism and against the open trading system are strengthening, it is in their interest to exercise restraint and thus help to reduce subsidies. The Government will continue to make clear their concern at Japan's excessive share of orders.

Many of these matters are referred to in the corporate plan of British Shipbuilders, which the Government are still studying in the light of the defence review. This is an ambitious plan which sets out the conditions that will have to be achieved if merchant shipbuilding by the end of the planned period in 1984–85 is to be near break-even point without the benefit of any intervention fund subsidy. The size of the problem is indicated by the fact that the merchant shipbuilding division of British Shipbuilders lost £43 million in 1980–81 after crediting intervention fund assistance of £44 million. In other words, to reach break-even point without subsidies, there would have to be a turn-round of £87 million per annum.

From that background, it is quite clear that such a turn-round will only be achieved with an increase in the price of ships and a large increase in the levels of productivity well in excess of those reached before nationalisation. Because of the size of the gap, continued support from the taxpayer will be required if the industry is to secure an adequate supply of orders.

Our industry is, of course, not alone in receiving support. Practically every shipbuilding industry in Western Europe receives subsidies in one form or another. Sometimes it is through credit arrangements and sometimes it is in the form of direct production aid. Naturally, each country's industry points to the most favourable features of its competitors, and true comparisons are difficult. But there is no doubt that the EEC shipbuilding directives play a valuable part in the reduction of these subsidies. Without them there would be a danger of a subsidy race and a further delay in raising prices, which is important for the industry. Both the Government and the Community consider that aid to shipbuilding should be temporary and diminishing.

While it is clear from our examination of the corporate plan that further support will be required, the present tranche of the intervention fund does not expire until July 1982. The Government wish to be clearer about international developments and market trends before coming to a view on the precise level of support. We shall also take into account the progress of the industry towards greater competitiveness. I assure the House that it will continue to be our firm policy to reduce the total amount of aid to British Shipbuilders.

Equally, I hope I have made it clear that the Government are prepared to continue to put money behind the corporation's efforts to become viable and to build on the progress already made. The Bill is proof of our intent, but we should not forget that the money has to come from elsewhere. It has to be paid for by taxes or borrowing. It is the Government's hope, as I am sure it is of all hon. Members, that the industry will become viable, but Government funds themselves cannot do that. As the chairman of the corporation recognised and has emphasise, the industry wishes to be rid of its present dependence on Government funds as soon as it can.

British Shipbuilders has had a good run of orders this year and most of the yards have work in hand or in prospect to the end of 1982. The corporation has also shown a capability and capacity for change. While the Far Eastern yards continue to dominate the basic bulk carrier market, British Shipbuilders has sought orders for technically advanced vessels. The Great Lake vessels ordered from Govan, the nuclear fuel carriers from Swan Hunter, the Thor Dahl newsprint carrier from Swan Hunter and the offshore supply vessels being built at a number of the smaller yards, are evidence of the success and the energy of British Shipbuilders in this direction.

I should also say, as there is so much emphasis in these debates on the intervention fund, that British Shipbuilders has won a number of orders for small vessels without intervention fund support.

Scott Lithgow and Cammell Laird have been brought progressively into offshore rig construction as the scope of naval work at those two yards diminishes. I take this opportunity of congratulating Scott Lithgow on recently winning a major order for a heavy duty drilling rig for the BNOC. The rig, when it is delivered in 1984, will be one of the most advanced available worldwide, capable of drilling in over 4,000 ft of water in the most adverse conditions. Not only does the order provide a substantial work load for Scott Lithgow; it places BS in a favourable position to pursue further orders for advanced heavy duty rigs.

There are good developments and these are some of them. However, it is also essential for BS to recover warship export markets which it has lost. I assure the House that the Government will do all they can to help in this matter.

I can understand the impatience of some of my hon. Friends that the lessening of the dependence of BS should be accelerated. But real progress is being made in the industry. In our view, the record of the industry justifies the further support inherent in the Bill.

It is also necessary to provide insurance against hardship which may be caused by the rate of change. That we can do through the extension of the shipbuilding redundancy payments scheme. I commend the Bill to the House.

4.3 pm

Dr. John Cunningham (Whitehaven)

I should begin by declaring an interest, in that I am sponsored by one of the unions heavily involved in shipbuilding—the General and Municipal Workers Union.

The Minister made a curious speech. He has given no convincing reasons why the Bill is being introduced now. After all, as he admitted, British Shipbuilders is significantly within the existing borrowing limit. There is already provision, without further legislation, for extending that borrowing limit. Furthermore, current provisions for redundancy payments would suffice until at least the middle of 1983, and if the situation were to deteriorate—we hope it will not—there would be ample time to make further provision.

It is curious that in spite of all the Government say about the PSBR, they should be introducing a measure which would, in theory at least, provide the opportunity for expanding the PSBR if British Shipbuilders were to take up some of the extra borrowing provision.

As far as we can tell, the corporation has not asked for any of the measures contained in the Bill, and the unions certainly are not asking for further provision for redundancies in the industry. If behind these proposals are Government intentions to have further reductions in shipbuilding capacity and further redundancies, we are totally opposed to such moves.

The effect of what is contained in the Bill—and the effect of much of what the Minister has said in introducing it—will be to create further unnecessary uncertainty in the British shipbuilding industry. It is the case, as he rightly said, that the unions have made a major contribution to the significant restructuring which has taken place in the industry and they desperately want to continue to do so.

What the Minister has said about redundancies, about privatisation, and about reduction in support for the industry through the intervention fund—and what he has not said about positive measures that the Government might have taken to help our shipbuilding and associated industries—are all matters which will have caused a great deal of uncertainty for the people whose lives depend upon British Shipbuilders. Those people are, in the main, in areas of already very severe unemployment.

Even in the Minister's own constituency in Greater London, and in the South-East and the South in general, many secondary companies in engineering—members of the British Marine Equipment Manufacturers Council—are themselves dependent on shipbuilding being the assembly industry that it is, and closures of yards would have wide repercussions throughout the British engineering industry.

The Minister could have made a much more positive speech than he has done today, and the Government could have made a much greater contribution to the future of people working in British Shipbuilders.

Declaring a man redundant in British Shipbuilders costs more than £8,000. The Manpower Services Commission's calculation is that declaring one person redundant, together with the average cost of redundancy payments, amounts to over £8,000, and there is no real benefit to anyone in the community in the long term by simply wiping out jobs and spending money in that way. It is not only in political and social terms that we would oppose further reductions and closures. It is not in our interests as a maritime nation or as a nation heavily committed to naval defence, and it is not in our interests as a trading nation, to have a further rundown in British shipbuilding capability.

The Minister dealt at some length with the financial situation in British Shipbuilders. We welcome the improvements. In many respects, no thanks are due to this Administration. When the Minister was talking about the reductions in losses and about the reduction in the external financing limit, he did not say that there has also been a regrettable reduction in the amount of money being invested in fixed assets in the corporation. When the Minister talked about competition and productivity, his words rang a little hollow. He knows very well that the level of investment in Japan, in Korea, and in shipyards in other countries which are in direct competition with British Shipbuilders, is of a different order of magnitude from that being allowed by the Government in our own shipyards.

Against that kind of competition, and with that imbalance in investment in new techniques, it is increasingly more difficult for our shipbuilders to compete on anything like an equal footing. On the same point, it is impossible for shipbuilders to improve their productivity with berthing programmes which leave wide gaps in their ability to produce anything at all. That has been another major problem in the past two years.

The Minister was right to praise the trade unions' contribution. They have made a major contribution. As the Minister said, there have been about 20,000 redundancies since vesting day and all, until the recent events at Robb Caledon, wthout any major industrial dispute. That situation, however, is now clearly at risk. Jim Murray of the boilermakers' union the major union in the industry, recently wrote in his union's journal: I am convinced there has been a positive campaign to create a chasm between us. That is between the management and the unions in British Shipbuilders. Mr. Murray continues: And to certain senior members who continue to tread the path of fear I shall repeat—as sure as night follows day there will come a time when our members will no longer accept seeing their leaders constantly humiliated in their endeavours to seek an honourable solution. The threatened breakdown in the successful co-operation and involvement of the unions in the British Shipbuilders operation was echoed on a slightly different point yesterday by Maurice Reed of the General and Municipal Workers Union. He said that because, of the deteriorating situation, it was likely that the cherished British Shipbuilders' national pay deal would come to an end due to the "consistent refusal" of the chairman and board of British Shipbuilders to behave as a responsible nationalised industry and allow the unions their rights of participation and consultation as the nationalisation Act laid down.

There is grave concern about the attitude of both the Government and the members of the board. That is perhaps best summed up by a letter to me from someone else who is prominent on the union side of the industry. He said: I think it is also worthwhile telling you that in the last 12 to 18 months our relationships with British Shipbuilders have been gradually deteriorating and this we can only attribute to the hard-line attitude being encouraged by the present Government on industrial relations in general and to the new attitude now prevailing in Brishish Shipbuilders. I have quoted senior people associated with the industry who take a sad view of the prospects for such an important, indeed crucial, facet of the progress that has been made to date in the shipbuilding corporation and its restructuring.

I emphasise that the unions are not seeking conflict and that the Government should act—the Minister had nothing to say about this—to preserve the valuable contribution that the unions have been making. Sections 5 and 6 of the 1977 Act gave the Government the opportunity to do that. In our view, the Government should strain every sinew to ensure that the co-operation of the last four years is not only maintained but developed.

I do not believe that it is in anyone's interest that the national bargain should disappear. The reduction of 168 bargains to two has been a major gain for everyone in the industry and has made a major contribution to the elimination of many problems. It is worth the Government fighting hard for that alone. The Government should look at the deteriorating situation closely and do whatever they can to help resolve the problems.

I agree with the Minister that the current level of orders is quite good. He is right to emphasise the good news of the BNOC order for the Clyde. There was more good news yesterday, with further orders for Govan Shipbuilders. That yard was threatened with closure by the previous Secretary of State; it is not only surviving, but has a full order book up to at least 1983.

Continuity of ordering and work is vital. We have to ask whether present order levels are likely to be maintained, let alone improved, without a number of significant changes in Government policy. The Opposition, unions in the industry and, to a large extent, British Shipbuilders and the industry generally think that the ordering situation is unlikely to be maintained without such changes,

What, after the industrial relations issues that I have raised, do we think are the key issues? I emphasise that none of those key issues is dealt with by the Bill. I have mentioned investment. Over the past couple of years, investment in fixed assets has been falling. The industry, at vesting day, had suffered from chronic under-investment in private hands. Much was on the verge of bankruptcy. That is the typical story of much of the private sector of British industry.

I understand that about £18.2 million was invested in fixed assets in 1979 and that the figure decreased to less than £17 million in 1980–81. By comparison, Japanese shipbuilders are investing £626 million this year, which is an increase of 18 per cent. on their investment level last year. The Opposition are in no doubt that increased capital investment is essential if British Shipbuilders is to have an opportunity of improving its productivity and competing.

The chairman of British Shipbuilders said in the 1981 report: Performance is not merely a matter of people working harder. There is an urgent need to establish the most modern management and production systems incorporating recent technological advances, particularly in computer aided design, computer graphics and manufacturing techniques. We believe that the chairman is right to emphasise those points in connection with the need to invest more in the corporation's activities and to give the work force the opportunity to do exactly what he and the rest of us want them to do—improve productivity.

A major decision was taken, surely correctly, by the corporation to diversify and alter the offshore operations work of Scott Lithgow on the Clyde and of Cammell Laird. As a nation, we surely must seek to achieve a larger share, not only of business in the British sector of the North Sea, but of the growing market for offshore structures worldwide.

The present order book is a good one and to the credit of British Shipbuilders; orders are in excess of £200 million. However, is it really sensible that orders from British operators should go to the Far East, as they have done? Is it sensible for British Gas—a public corporation—to order structures for the Ruff field from other than British shipyards? Should the Government not be ensuring that public corporations, in particular, place their orders in British yards? We say that they should do so, and we hope that the Government will act accordingly.

Merchant shipbuilding has suffered a great decline. I do not quarrel with the Minister's analysis of the last few years. There has been a world-wide decline since 1975 from something in excess of 34 million gross registered tonnes to just over 13 million gross registered tonnes in 1980. That is a major world-wide slump in merchant shipping orders. There is some evidence, as the hon. Gentleman said, that the situation is now levelling out. The inevitable restructuring of British Shipbuilders in the face of this decline has had a major impact on employment. I would, however, suggest to the Minister and to Conservative Members that, given the nature of this business and, in particular, the cyclical nature of ordering, there is not the slightest shred of evidence to suppose that if any of the yards had been in private hands they would have done better. Most of them would have been closed long ago.

In the face of the kind of recession that is taking place, no one other than the Government and the public corporation can take the necessary action to counteract the forces that have been prevailing. As the Minister said, it is not a question, as many of his hon. Friends, and no doubt he himself, would like, of their own favourite market forces. Subsidy and support is wide-ranging and world-wide, including, in many forms, the yards in Japan and Korea.

There is no evidence to suppose that if we continue along the course to which the Government are committed and withdraw progressively support from our industries those in the Far East and elsewhere will follow suit. The result of the Government's pursuit of such policies is likely further to disadvantage our merchant ship building yards. As the Minister remarked, in the first six months of this year throughout the OECD countries Japan took almost 70 per cent. of all orders. That is no coincidence. It is not merely a question of investment and better productivity. It is a question of better financing arrangements, more generous financing arrangements and greater support for shipowners to build their ships and buy their ships from Japanese yards. We believe that the Government should take a leaf out of the Japanese book. So do British shipping owners and operators. They have been making similar representations to the Minister's hon. Friend at the Department of Trade recently.

Of current British Shipbuilders orders, 40 per cent. are for overseas registration. Export orders are currently as high as 70 per cent. of sales intake. This emphasises the fact that very little, or perhaps I should say not sufficient, of the business coming to our shipyards emanates from British shipping. Too much of British shipping business for new vessels, for repair and maintenance and for conversion is going abroad. The Government should act to end that situation.

British shipping itself is in decline. This is made clear in an article in Lloyd's List today, headed: UK's fleet poised to dip below 30m mark. There is deep concern. In her speech last night, the Prime Minister said that we were a trading nation—a nation of traders and a maritime nation. Are the Government happy not only to see a further decline in British shipbuilding but also to see a decline in British shipping? Do not the two things to some extent go hand in hand? Do not the Government have a responsibility to take action to improve the situation?

Mr. R. C. Mitchell (Southampton, Itchen)

I am interested in the hon. Gentleman's argument. Would not the Labour Party's policy of massive import controls, leading inevitably to massive retaliation against our exports, prove very damaging to the shipping industry of this country?

Dr. Cunningham

The hon. Gentleman has some nerve, given that he supported Labour Party policy on shipbuilding in his own constituency, to start now attacking party policy in a wholly inaccurate manner. The hon. Gentleman is right to say that the Labour Party is concerned about import controls. We would be in favour, as he knows well, of selective action. The hon. Gentleman used the word "massive" and implied "all-embracing". I reject both descriptions of what Labour Party policy would be. I do not, however, flinch from the argument that we are interested in taking action to defend our industries against the kind of competition that I have described. If the hon. Gentleman does not subscribe to that view, the first people to whom he should make this fact clear are the shipworkers in his constituency.

The Minister said something that sounded almost like praise of what had been taking place in the EEC with respect to shipbuilding. I find it difficult to find much of value or support for our industry in what has taken place in the European Economic Community. There has been total failure to make any progress on a scrap and build programme. No progress at all has been made in that connection. The fifth directive is not really helpful to our industry. The reduction of the intervention fund is not in the interests of British shipbuilding. I find little or nothing positive that has come out of the EEC to help our industry.

As my hon. Friend the Member for Jarrow (Mr. Dixon) has said, the EEC refused to come up with a redundancy payments scheme for shipbuilding at anything like the same level of support that was forthcoming for steel. In their way, the rundown and the closures have been equally as dramatic in many riverside communities as have closures in steel areas. I do not find any cause to be satisfied with what has happened in terms of the EEC approach to shipbuilding. Indeed, I am almost inclined to say that there is no coherent approach at all. The Government would do well to take a far more aggressive stance in the Community in defence of British shipbuilding and British shipping.

The Minister referred to the defence programme. It is clear from what has been said and what has transpired that British Shipbuilders had no prior warning of the Government's switch of emphasis in terms of the change from surface vessels to submarines and the Trident programme. Effectively, the decision has blown a massive hole in British Shipbuilders' corporate plan, well below the waterline. It has been a very damaging experience for British Shipbuilders. As the Minister, I am sure, knows well, it is causing increasing anxiety in terms of the future, not only of some naval yards but also of the so-called mixed yards, such as Swan Hunter and others, because of a great lack of orders looming up, which will cause serious problems.

Far from the current defence programme being a major support to British Shipbuilders, the reverse is the case. It may guarantee the future of one or two yards but it will do much widespread damage in the rest of the corporation's activities. The Opposition simply do not believe that the Trident programme is necessary or that even this Government will in the end be able to face the increasingly high cost of such a programme. The sooner the Government come to that conclusion and admit it the better it will be, not only for our defence but also for our shipbuilding interests.

The Minister, almost apologetically, made the required genuflection—incidentally, to an array of empty Conservative Back Benches—about privatisation. He said that he understood Conservative Members' concern, but they were not here to express it. That showed how unnecessary was the genuflection that he made in their direction.

The Minister did not advance one valid argument in favour of privatisation in the present circumstances. We believe that if many of the operations had been in the private sector they would not have survived. If the Government sought to dismember the corporation, some of the yards would not find buyers. If the warship yards, stuffed full of orders from the Ministry of Defence, were offered for sale, it would cause immeasurable damage to the corporation's remaining activities. It would end the great concentration of effort in design and the associated activities that the corporation has worked so hard to centralise, to economise on and to make more efficient.

Mr. Gordon A. T. Bagier (Sunderland, South)

In the absence of the Minister finding a good excuse for privatisation, will my hon. Friend remind him of Sunderland Shipbuilders Ltd.—which was part of a private holiday company called Court Lines—and what almost happened to that shipyard when the holiday company crashed?

Dr. Cunningham

My hon. Friend, who has a major and successful shipbuilding operation in his constituency, has done that adequately. The incident shows that private enterprise in shipbuilding has failed in Britain. The evidence is that the industry would be unable to cope with the scale of the problems facing it if it were to return to private hands.

If some of the policy issues that I have mentioned were taken up by the Government, they would provide a major boost to our important ship repair industry. Acceptance or achievement of a scrap and build programme would be a major gain for the ship repair industry. I regret that the Minister had nothing to say about that matter.

The Government should take a leaf out of the book of the United States of America. Lloyd's List contains a fund of information today. I refer the Minister to another front page article headed Marad makes its shipping priorities clear". I see that the Minister's advisers are already unwrapping the article to which I referred. If the Government took the aggressive attitude towards shipbuilding and shipping that is increasingly being taken by the United States—that well-known home of free enterprise and market forces—British shipping and shipbuilding would be in a much healthier and happier state. The workers in the industry would be much happier about their future prospects.

There is a strong case for relaxing financial limits to allow British Shipbuilders to invest more money. Incentives should be provided to British shipowners to have their ships built in British yards. There should be regulated and organised public sector ordering, especially for Royal Navy vessels. The Government should renounce any thought of privatising the assets of British Shipbuilders. They must adopt a much higher profile in discussions within the EEC about matters that affect British shipbuilding, especially the scrap and build policy.

We believe that the Government should look at British shipbuilding and British shipping together. A concerted maritime strategy covering both industries would gain widespread support, not only from Opposition Members. It would be supported by British Shipbuilders, the General Council of British Shipping, the Confederation of Shipbuilding and Engineering Unions, the National Union of Seamen and the Trades Union Congress as a whole. It would almost certainly be supported by those organisations in the engineering industry that are so heavily dependent upon the future of British Shipbuilders. It is an opportunity that must be grasped. The Government have shown no sign of their willingness to do so.

Mr. Anthony Nelson (Chichester)

I sympathise with what the hon. Gentleman said about the shipbuilding and shipowning sectors. Would such a policy imply that finance should be made available preferentially where orders are related solely to British-owned companies buying British-built ships? For example, the Ship Mortgage Finance Company Ltd. makes mortgage finance available for the purchase of ships at a preferential and low rate of interest. That money is available to British shipping companies to finance the purchase of ships anywhere in the world. If the scheme was limited to British yards—there is an argument for that—it might be opposed by shipping companies. It would help the House if the hon. Gentleman made known his position about that.

Dr. Cunningham

I am arguing for significant aid to build British ships in British shipyards. I hope that my argument has not been unclear. I do not say that the proposal would be universally popular, but, as a maritime trading nation with major interests in shipping—Britain still has the fourth largest merchant fleet and is the sixth largest shipbuilding nation, although its production is now tiny—it is incumbent upon us to think about a programme that will bring together those interlocking interests. We need a programme that will offer us an industrial opportunity and an opportunity for employment, developing new skills and developing British technology and getting it sold world-wide. The Government should address themselves to those matters and not just to the restricted nature of the Bill. However, I assure the Minister that we shall not seek to divide the House this afternoon.

4.38 pm

Mr. James Hill (Southampton, Test)

I congratulate the Minister on a good opening speech, which received the approbation of the House and dealt with the conflicts that have occurred since the formation of British Shipbuilders.

Although Vosper Thornycroft is not in my constituency, its dry docks are situated there and many of its employees live in Southampton, Test. Since Vosper Thornycroft took over the repair work of Harland and Wolff, when it pulled back to Belfast, the overall picture has been one of great hope. Until the cuts in Ministry of Defence expenditure, the yards, both in Southampton and Gosport, created much employment and prosperity.

Naturally enough, I and the hon. Member for Southampton, Itchen (Mr. Mitchell) slightly resent the argument that more aid should go to the regions and less to what used to be the prosperous South. It is not 1981 talk to argue that regional aid and employment provisions should be concentrated on the North-East, the North-West, Scotland or Northern Ireland. The South of England also has an unemployment problem.

Mr. Atkinson, chairman of British Shipbuilders, and his board adopted an active, imaginative and realistic approach. I pressurised them as much as I could from the Back Benches to take over the Southampton dry docks. They eventually reached agreement with the unions and the company now manages and owns the dry docks. As Mr. Atkinson was only too well aware, without these dry docks it would have been extremely difficult for Vosper Thornycroft to continue not only to repair surface warships but to build warships, with their complicated underwater structure. I am pleased that the company came to a workable agreement not only with the unions but also with the British Transport Docks Board and that after an emotive few months the situation has been resolved.

The Opposition frequently tell the Government what they believe they should do. The Government have done much more to make British Shipbuilders viable than the Labour Government. Government support of £500 million by March 1981 is excellent. We are desperately willing British Shipbuilders to succeed. We see the same story over all the nationalised industries—carping from the Opposition and at least chequebook action from the Government. I congratulate the Department on its excellent support of British Shipbuilders.

In the eyes of the public the Bill has little significance, as it is merely increasing the borrowing level. However, it is most important to have the levels increased from time to time. I am pleased that the top level will be £800 million, which will provide greater opportunities, particularly for building warships.

Only a short time ago the building of warships was supporting the other operations. The picture is now different. The cut in the defence programme means fewer opportunities in the warship building yards. No doubt many Opposition Members will press the case for their regions that are already getting the maximum aid and forget that human emotions and families are involved whether a man is unemployed in Aberdeen, Liverpool or Southampton. Just as much careful thought and consideration should be given to a constituency such as mine and we shall pressure the Government to ensure that we get our fair share of the orders available.

Mr. R. C. Mitchell

Can the hon. Gentleman tell us how many people were unemployed in Southampton in 1979 before the Government came to power and how many are unemployed now?

Mr. Hill

I believe, working from memory, that in 1979 unemployment stood at about 6 per cent.; it is now about 9.1 per cent.

Mr. Gordon Wilson

Is that all? It is 16 per cent. in my constituency.

Mr. Hill

Is the hon. Gentleman saying that the 9.1 per cent. do not count because he has 16 per cent. of his constituents unemployed? Is he saying that his people should eat for ever and mine should starve? It is an irrational approach. Unemployment in the shipbuilding industry is a general problem.

The problem is more imminent in warship building than in merchant shipbuilding. The Opposition say that we should not sell warships to certain countries. That is ridiculous. Crowd control does not need a frigate or submarine. Gunboats do not drive up the high street. I will not name the countries. It is an idiotic suggestion. The Opposition frequently argue that we should not sell certain articles of war to certain countries. In many ways I agree.

Mr. Stanley Orme (Salford, West)

Will the hon. Gentleman give way?

Mr. Hill

I serve on the Council of Europe migration, refugees and demography committee in Paris. We have studied human rights in Latin America. Those rights will not be advanced by our not selling warships to the surrounding countries. I am fighting for my constituents.

Mr. Orme

Will the hon. Gentleman give way?

Mr. Hill

The right hon. Gentleman will have his turn as a Front Bench spokesman. The Opposition do not wish to hear the truth, as was illustrated at Question Time today.

I am pleased that the Government intend to bring private investment into British Shipbuilders. My only bone of contention is that Vosper Thornycroft wished to have the whole of its company back when the Conservative Government took control.

The most encouraging aspect of the matter, which cannot be stopped by discussion inside or outside the House, is that world demand is increasing. Demand brings prosperity. It is the simple lesson reiterated by every Government spokesman. Manufacturers need customers. British Shipbuilders is beginning to gain from the increase of almost 50 per cent. in world demand. I hope that a certain percentage of the increased demand will be for warships.

Mr. Ernie Ross (Dundee, West)

A Labour Government would not sell warships to Chile if the Government there continue to oppress their people. We have made that clear.

Mr. Hill

I should back Vosper Thornycroft to the hilt to get an order from the Chilean Government. It would bring productivity and prosperity to my constituency and would not deprive anyone of his human rights. Frankly, the more orders we can get from any part of the world, the better.

The trade unions have co-operated completely, not only with the Government but with the British Shipbuilders management. A group of shop stewards came to the House at the time when British Shipbuilders and the British Transport Docks Board were negotiating to take over the dry docks. Their co-operation was magnificent, and it was right for the Minister to praise them. Even though 19,000 employees have left the industry, the prospects for the remainder are that much healthier. I am sure that as a result of the restructuring the industry will be much more healthy and able to compete against market forces throughout the Community, and with Taiwan, Japan and elsewhere.

We have been told that the behaviour of the market and the prices available are dictated by the actions of Japan. It may be true. I wanted to put a question to the Shadow Minister the hon. Member for Whitehaven (Dr. Cunningham) when he spoke, but out of courtesy I did not interrupt him, when he said that the Community had done nothing. In fact, the Community has saved British Shipbuilders from a lot more harm. The Community agreed that there should be a uniform subsidy to shipbuilding yards within the Community. If it had not been for that I could understand one or two countries heavily subsidising their industries to the detriment of other members of the Community. There would have been a subsidy war which we could not have won. I hope that the Minister, in winding up, will give us more details of the way in which the Community, by agreeing on an overall subsidy structure, has aided British Shipbuilders in its survival plan.

I hope that the British Shipbuilders corporate plan will be investigated by the Select Committee on Industry and Trade. That Committee has already dealt with a corporate plan for British Steel and one for British Leyland. It would, therefore, seem natural to examine the corporate plan of British Shipbuilders. It would be easy at the same time to find what effect the increase in cost by British Steel would have on the corporate plan during the next two to three years, because, as we all know, the chairman of British Steel has announced that he wants to increase his prices for steel products in the future.

The EEC shipbuilding directives that I mentioned earlier need more explanation. Those hon. Members who hardly leave the Tea Room of the House of Commons probably know a lot about events in Chile and South Africa, but they know little about what happens in the Community. I hope that my hon. Friend will give more information—perhaps not tonight—about Community policy on shipbuilding and how the various directives affect the industry and the manning programmes. If he can do so, it will be a great help to the House.

I am pleased to hear that United Kingdom yards are getting orders from the Far East for the bulk carrier, the Great Lakes vessels, newsprint carriers and offshore supply vessels. We are and always have been a maritime nation, and the fact that we now have a smaller fleet is probably because many vessels are registered under flags of convenience. The price of labour has probably attracted less scrupulous shipowners to operate under flags of convenience, perhaps even to survive. As I said, we are a maritime nation, and the South Coast has been famous for warship building for many centuries.

The present recovery plan for the "Mary Rose" is coming along well, and another £1 million or so is required. Perhaps I should not quote Henry VIII as a great warship builder, but we in Southampton depend on the warship trade. We have unemployment problems. Highly-skilled men who are unemployed in the shipbuilding industry have great difficulty in finding alternative employment. That should not all go to the North-West, the North-East and areas for which the voices of Opposition Members are the loudest. It should be structured, and I hope that when Mr. Atkinson reads our proceedings tomorrow he will do all that he can to obtain further warship orders throughout the world for what was—and, I think, can still be—the most profitable side of British Shipbuilders.

4.57 pm

Mr. R. McTaggart (Glasgow, Central)

I am glad to have the opportunity to speak in the debate, not least because I am a former employee of British Shipbuilders at its Govan yard. Although, as my hon. Friend the Member for Whitehaven (Dr. Cunningham) said, we shall not oppose these measures today, I want to express my bitter disappointment that they do not go much further.

I have kept in close contact with many of my former colleagues and friends. I wish to point out certain anomalies in the present redundancy scheme, particularly for former members of the work force who are over 40 years of age. Depending on length of service, people over 40 years of age, as well as qualifying for the State redundancy scheme and the British Shipbuilders redundancy scheme, also qualify for a pension. That pension is based on earnings throughout service. The total entitlement is spread in weekly payments over two years. Many Conservative Members may not know, and I urge them to read the facts before the next general election, that unemployment benefit is paid to an individual for only 52 weeks. When those 52 weeks are up, he reverts to some other form of State aid which is means-tested. It is normally supplementary benefit. Under the present scheme, an employee qualifies for a State pension of perhaps £5 a week to be paid over two years. That may be all right for the first year—the £5 being to help reduce the hardship of unemployment—but in the second year of unemployment the person's pension is taken into consideration and his supplementary benefit is reduced by a corresponding amount. Many people, because the pension scheme is an inducement for them to give up their jobs and voluntarily to become redundant, feel 12 months later that they are being conned. Although it may be costing the British Shipbuilders pension fund, money is going back into the Government's coffers.

A much fairer scheme would be to divide the sum by 52, spreading any pension entitlement over a one-year period. I am sure that that would get rid of much of the resentment which now prevails in the industry. The scheme was probably well intentioned. It was intended that people looking for alternative employment would have extra money at that time. However, unfortunately the unemployment figures have tended to rise. It is possible that many of my former colleagues who took redundancy in the hope of alternative employment, particularly if they were over 40, will have little chance of working again.

I am disappointed at the plans for the future of shipbuilding. The Government say that the recession is bottoming out, that silver clouds are in the sky and that by the end of the 1980s industry and commerce will be on the up and up.

The yard at which I worked used to take on 140 apprentices a year. This year only 25 apprentices have been taken on, and that was only after much arguing by the shop stewards. If the upsurge comes for shipbuilding there will be a dearth of skilled tradesmen to meet the demand. There was never a more opportune time to encourage British Shipbuilders to set up a fund to enable it to take on apprentices.

We are told that the first two years of an apprentice's training is the most uneconomical for an employer, that the employer receives little return for the in-depth training given to an apprentice. However, a ship is a floating town and needs all the skills of joiners, carpenters, plumbers, electricians and engineers. Apprentices could be trained in the shipyards to create a pool into which employers could dip when the industry picks up. That would go a long way to wipe out the criticisms of the YOP. It would benefit private employers and show that the Government are truly concerned about youth unemployment.

Britain is an island nation. It needs shipping and a healthy shipbuilding industry. My suggestions would solve some of the problems experienced by British Shipbuilders, but much more is needed. Encouragement and inducement are required so that owners not only scrap and build but scrap and build British. Since we want to build a competitive industry for the future I urge the Government to take my ideas on board.

5.3 pm

Mr. W. E. Garrett (Wallsend)

I shall not attempt to emulate the hon. Member for Southampton, Test (Mr. Hill) by rambling to Chile or elsewhere. I shall concentrate on matters arising from the Minister's speech. I was pleased that he referred to the work of the chairman of British Shipbuilders and his excellent team of officials. Mr. Atkinson served his apprenticeship at Swan Hunter in Wallsend and has risen to the top of the industrial world. He is a man of tremendous experience. I pay tribute to the senior officials who roamed the world for orders. Having listened to them, I realise that theirs has been a hard and difficult job involving many weeks from home. Attaining such orders in spite of the competition is no mean achievement. The House and employees in the industry should give credit where it is due.

We live in a difficult world which is particularly difficult for the shipbuildng industry. People who depend on the industry for their living appreciate that the Government have recognised the importance of the industry by raising the borrowing limits. A year ago I did not think that that was possible. I thought that the shipbuilding industry, like other industries, would suffer severe cuts in cash. At last there is some recognition that some industries need State funds to survive, at least for the time being.

The issue is not all negative. Some of the money has been used for training, as it will be in future. The skills of our technicians in the higher echelons are equal to any skills in the world. Without the skills acquired in the shipbuilding, ship repairing and marine engineering industries we should have had great difficulty in obtaining the craftsmen and skilled personnel to man our offshore oil industry. Plumbers, fitters, electricians, riggers and many other skilled personnel in that industry started their careers in the shipbuilding industry. I agree with my hon. Friend the Member for Glasgow, Central (Mr. McTaggart) that we should maintain and possibly improve the input of apprentices, not merely for the future of the shipbuilding industry but for the future of the other technologies which I have mentioned.

When the cash is allocated for research I hope that the Minister will consider the industry's orphan—marine engineering. If the British shipbuilding industry obtained a fraction of the money for the development of marine engineering that is given to the car industry we would re-establish ourselves as the biggest and most important marine engineering industry in the world.

We have slipped to an abysmally low level. However, we can improve and obtain orders in this highly competitive field. We have some expertise in marine engineering. If we spent more money on research and development it would be a better investment than putting it in some sectors of the car industry.

I acknowledge that there have been some hiccups in industrial relations lately. The Robb Caledon dispute comes to mind. I always try to keep out of industrial relations because, as a Member sponsored by the AEUW, I should probably be told to mind my own business. However, in the last few years there has been an improvement in industrial relations. Perhaps my hon. Friend the Member for Whitehaven (Dr. Cunningham) will disagree with that. The hiccups are nothing compared with what used to happen. Goodwill and understanding exist on both sides. I believe that there will be closer liaison to get the best out of the industry and the best for the nation.

If hon. Members knew the competition involved in obtaining ship repair orders, getting the ship into the repair yard or close to the docks and meeting time limits, they would understand how important industrial relations are. The ship repair sector is not doing too badly—things could be better—relative to world conditions.

The shipbuilding industry is in a slightly better shape than it was on the last occasion that we debated the borrowing powers. It is certainly much leaner. It is improving, and we are moving up the world league. Credit is due to all concerned. I hope that the Government's future role will be to encourage both sides in that important industry to work together to the benefit of all.

5.10 pm

Mr. Gordon Wilson (Dundee, East)

The hon. Member for Wallsend (Mr. Garrett) made a thoughtful speech. He rightly said that the shipbuilding industry is on the upturn. We should congratulate those yards that have recently secured valuable orders—all the more valuable because they have been won against extensive competition. That is good for the morale of the industry.

The hon. Gentleman said that there had been some industrial relations problems in the industry. He referred to the Robb Caledon dispute as a "hiccup". For the city of Dundee, that hiccup is a mighty disturbance in its bodily system. It is having a substantial knock-on effect throughout the industry.

Mr. W. E. Garrett

I must apologise if I gave the hon. Gentleman the wrong impression. I was not saying that it did not affect the people of Dundee. I know that it is not a hiccup to them.

Mr. Wilson

I am grateful to the hon. Gentleman for his apology. I have known him well for many years, and I know that he did not mean to convey that impression.

Dundee has already lost 800 jobs, and 141 men should still be employed at the Robb Caledon yard. The effects of the dispute have spread far and wide beyond Dundee. It is essentially linked with a breach of the Blackpool agreement. The industrial objections were called off recently because it was hoped that the problem would be solved if the yard was taken over by Kestrel Marine. People in Dundee thought that that would take place. Unfortunately because of the attitude of the ports authority which sought to secure land on the site occupied by British Shipbuilders in the harbour area, the Kestrel takeover has been shelved, at least for the time being.

I hope that the negotiations will resume. I call upon the port authority in Dundee to accept the industrial case for the build-up and use of the harbour area. It should allow Kestrel Marine to have the land that it requires. The Robb Caledon workers should be transferred to the operations of Kestrel Marine, thereby retaining the employment based on that site. Nevertheless, the negotiations have fallen through. The trade unions will have to look again at their attitude towards British Shipbuilders.

If Kestrel Marine does not take over the yard, British Shipbuilders could be in breach of the Blackpool agreement on non-voluntary redundancies. The redundancies at Robb Caledon are compulsory. It is ludicrous to propose that the workers go to Leith, some 60 miles away, on a regular day-to-day basis. The explanation given by British Shipbuilders that the redundancies are voluntary is not acceptable to any reasonable person. There is a danger that the industrial problems afflicting British Shipbuilders since September will resume.

I hope that the Minister is listening carefully. I urge him to intervene in the British Shipbuilders—Robb Caledon problem. It will do nobody any good—not the Government, British Shipbuilders or Dundee—if the dispute is allowed to drag on, week in week out, with a sit-in at the yard. The Minister has had cited to him the cases of two yards that previously appeared to be in danger of closure—the yard at Govan and the UIE yard—formerly Marathon—at Clydebank, both of which are doing extremely well. Simply because a yard has had difficulties in the past does not necessarily mean that it must be closed and the shipbuilding operation curtailed or ended.

If the Robb Caledon yard had been given the necessary capital investment, and especially the opportunity of orders supplied by British Shipbuilders, it would have fulfilled its orders effectively and efficiently. Faced with the prospect of further industrial problems for British Shipbuilders, at a time when the market for shipbuilding is improving and when it is showing that it can win orders on the international market, it is sensible and pragmatic for the Government to suggest to British Shipbuilders that it reconsider the position of shipbuilding in the Dundee area.

The original legislation involving the nationalisation of the yard was incomplete and weak in the industrial duties placed on British Shipbuilders. It should have been placed under a legal obligation to take a greater interest in its operations so as to maintain employment in areas that lack job opportunities. British Steel has gone out of its way to use the facilities made redundant to steelmaking by entering the area of factory erection and other businesses. That attitude is far more constructive and positive than that displayed by British Shipbuilders in closing down the Robb Caledon yard.

In the past I have been severe in my criticism of the management of British Shipbuilders. It has acted in a way that would have caused Victorian employers to have second thoughts. It has deliberately gone out of its way to assassinate the Robb Caledon yard and, through a starvation of orders, to prevent it from competing to build ships. Having made those trenchant criticisms of British Shipbuilders, I hope that it will realise that it would be better for the overall health of the British shipbuilding industry, as well as for the industrial health of Dundee, if it admitted that it was rash and mistaken and now went out of its way to provide orders to allow the men at the Robb Caledon yard to prove that they can produce the ships for which the yard was intended. Given that opportunity, I am sure that they would rise to the challenge.

5.18 pm

Mr. Don Dixon (Jarrow)

I apologise to the Minister and my hon. Friend the Member for Whitehaven (Dr. Cunningham) for not being present at the start of the debate. I had to attend a Select Committee. In spite of all the talk about productivity, I have not yet worked out how to be in two places at the same time.

Like my right hon. and hon. Friends, I welcome the Bill. Clause 1 extends the borrowing powers of British Shipbuilders. Clause 2 extends the date by which redundancy payments can be made. When the previous Bill was debated, my right hon. Friend the Member for Deptford (Mr. Silkin) quoted Iain Macleod as having said, on a similar occasion, that to vote against such a measure would be like shooting a one-legged Santa Claus. That sums up the Bill.

Since I have been a Member of the House, we have debated the shipbuilding industry many times, and on every occasion, as now, we have discussed redundancy and limiting the powers of British Shipbuilders My hon. Friend the Member for Wallsend (Mr. Garrett) said that there had been a hiccup in industrial relations. The only reason for it is that the men are concerned about being thrown on to the streets. The shipbuilding industry has been subjected to this kind of treatment for years. I know what I am talking about on this subject, because I have worked in the shipbuilding industry all my working life. I have been unemployed on many occasions. I still live among shipbuilding families and I know the hardships that they endure when the breadwinner is out of work.

I pay tribute to the Labour Government for nationalising the shipbuilding industry. If they had not done so, we should not now be having this debate, because there would have been no shipbuilding industry left to debate. I should also like to give credit to my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) and his colleagues for their hard work in getting the legislation on the statute book.

The shipbuilding industry is a typical example of the failure of competitive capitalism. We in Jarrow are still dealing with some of the scars of the pre-war years. The slag heap at the centre of Jarrow, which was an eyesore for many years, was eventually cleared and we are having to pay a substantial sum to the owner of the land on which the heap was situated.

The shipbuilding industry has been contracting for a considerable time. The Minister said that 19,000 people had been made redundant since 1979. Between 1958 and 1965 manpower in shipbuilding fell from 90,000 to 50,000. I should like to see in the Bill provision not necessarily for an extension of the borrowing powers of British Shipbuilders but to give it more money to invest in equipment and plant. That is what British Shipbuilders wants, because it has been starved of investment for many years.

I was pleased that the Minister said, when referring to productivity, that we should compare like with like. Mr. Robert Atkinson, the chairman of British Shipbuilders, wrote a letter to The Times which was reproduced in an article in this month's Shipbuilding News. In the course of giving the reasons for the decline of the shipbuilding industry in Western Europe he said: The postwar growth of foreign fleets and shipbuilding is not because of failure but because of a combination of factors such as nationalism, changing patterns of world trade and, above all else, the financial, taxation and other direct and indirect support given by foreign governments to their home shipping and shipbuilding industries. When talking about competition, we must remember that British Shipbuilders is operating in an unfair market, because other countries give hidden subsidies to their industries. We should bear that in mind when considering British Shipbuilders and the men who work in it.

When the industry was in private hands it was starved of investment. There was virtually no investment. A survey was carried out in the early 1970s which showed that, for every man employed in the British shipbuilding industry, the asset worth was £825. For everyone employed in the industry in West Germany the asset worth was £1,000, in Italy £1,200, in Sweden £1,800, and in Japan £2,800. A later survey showed that an additional amount of only £80 per man had been invested in the British shipbuilding industry. West Germany had invested a further £162 per worker, Japan a further £409, and Sweden a further £554.

My hon. Friend the Member for Whitehaven mentioned Lloyd's List. In September it stated that Japan's seven largest shipbuilders had earmarked £626 million for investment in plant and equipment this year. That is the sort of investment with which British shipbuilding workers have to compete.

We are sick and tired of reports on the industry. There was the Paton report of 1962, the Geddes report of 1966 and the Booz Allen report of 1972. Every one of those reports referred to the lack of investment in the shipbuilding industry. Indeed, there was never a better case presented for nationalisation than that set out in the Booz Allen report.

When talking about prices and competitiveness, it should be remembered that the work of British Shipbuilders accounts for only 28 per cent. of the price of a ship. The suppliers and others outside the control of British Shipbuilders account for the remaining 72 per cent.

I was pleased when the Minister referred to good labour relations. The chairman of British Shipbuilders stated in the report and accounts that the number of days lost through industrial action during the year was fewer by 1,000 than the total number of days available. That is worth noting.

In a previous debate, I said that men working in British shipbuilding yards were still pushing shell plates around on wooden barrows. My hon. Friend the Member for South Shields (Dr. Clark) and I invited the hon. Member for Beeston (Mr. Lester), who was then an Under-Secretary of State for Employment, to visit one of the ship repair yards on South Tyneside. I showed him one of the wooden barrows which was still in use there last year. That is the sort of equipment that the men in the industry are having to use while faced with competition from other countries.

The Government's decision to cut back on the surface fleet will hit mixed yards such as Swan Hunter, especially in the North-East, where there is a great dependence on shipbuilding. The cutback will have a tremendous effect. Nearly 8 per cent. of those working in manufacturing industry in the North-East are engaged in the shipbuilding industry. The region provides 20 per cent. of the total work force in the shipbuilding, ship repairing and marine engineering industries. Any further contraction will hit areas such as the North-East extremely hard.

When the previous Labour Government negotiated the Polish deal there was a great deal of criticism from Conservative Members. In fact, it was one of the best deals ever to be negotiated. It is far better to build ships for Poles than to send them food parcels, although in the present climate no one criticises the aid that is being given to the Poles.

In my area 672 skilled platers were signing the book earlier this year. At that time there was not one vacancy in Tyne and Wear. At the same time 924 skilled welders were signing the book when there were only two vacancies. On 28 October the Newcastle Journal included an article about 7,000 drivers in the North-East chasing 67 jobs. On 9 November the same paper featured a report about 3,000 school leavers in the Sunderland area on Wearside chasing 41 jobs.

Dr. David Clark (South Shields)

Does my hon. Friend agree that that led to tragic advertisements in the North-Eastern papers towards the end of last year on behalf of the MOD, when it urged people to apply for a job for life in the Chatham dockyard? The boilermakers, the coppersmiths and the platelayers have now been served notice. Not only that, but they are likely to be turned out of their tied houses in Chatham. That is a desperate situation.

Mr. Dixon

That is in line with what the Prime Minister says, that the unemployed should be mobile. What happens when people move from areas of high unemployment to areas where they can obtain jobs and there is contraction of employment in that area? The last in are the first out. People who have moved hundreds of miles from their friends and families find themselves out of work again. That is a tragedy. It is nonsense that we should be jumping on our bikes and moving to different areas to find jobs.

The Mercantile dry dock in a ship repairing yard in my constituency was put on care and maintenance by British Shipbuilders. That repair yard worked through the war. Hitler's bombers could not stop that yard repairing ships. The men worked on night shifts during the war. However, the Government have put the screws on and those men are now signing the book.

Clause 2 extends the date for redundancy payments. It is interesting that the Bill states that the current average benefit under existing schemes is about £3,800 per employee. When the Shipbuilding (Redundancy Payments) Act was introduced, there were banner headlines about shipyard workers receiving golden handshakes of £10,000 plus. That statement in the Bill proves how misleading those newspaper reports were.

Earlier I asked the Minister why there were different redundancy payments for shipyard workers, steel workers and mine workers. They have all been made redundant by nationalised industries. They all live in areas where there is little, if any, alternative work. Most of the workers who are made redundant are 40 and over. There is little prospect of them ever being employed again.

Therefore, why is there that difference in redundancy pay? The Minister said that there were different agreements. Is that a reason—because the shipyard workers have been too co-operative? If that is the Minister's reason, no wonder there will be bad labour relations. There is no reason why shipyard workers, miners or steel workers should have different sums of redundancy pay. We are selling not only an existing job, but a job opportunity for someone who is to come into the industry at later date.

What has happened to the scrap and build scheme, to which my hon. Friend the Member for Whitehaven referred? We have asked that question repeatedly. Japan has had a scrap and build scheme for a considerable time. What incentives will the Minister give to shipowners to build in this country? I accept the point made by my hon. Friend the Member for Glasgow, Central (Mr. McTaggart), that if incentives are to be given they should be incentives to build in this country. Bearing in mind that the Minister has just been transferred from the Department of Energy, will he give additional finance to the British shipbuilding industry for more research into converting ship's boilers from burning oil to burning coal?

We would like to see the Minister take those steps. If possible, the borrowing powers of British Shipbuilders should be extended. We want more than just an extension of the period in which redundancy payments are given. That is not sufficient support.

A while ago I heard a tale that reminds me of what is happening in the industry today. It was the tale of the donkey and the economist. The economist decided to reduce the amount of oats that he gave to his donkey by a handful each week. Later he said to one of his friends that he had reduced the amount to only a handful per week, and would have reduced it further, but the donkey had died of starvation. That is what we are facing in the British shipbuilding industry.

British Shipbuilders should not become the Shipbuilding Security Co. Ltd. of the post-war era. We saw what happened before the war when the assets were sold in the shipyards and there was an embargo of 40 years on the yards so that ships could not be built. That happenend to Jarrow in 1936. A few years later, in 1939 the Government pleaded with the men to go back and build ships because of the war.

We live on an island in a world with seven-eighths of its surface covered by water. We depend on trade, on ships to carry that trade and on the shipbuilding industry to build those ships. Therefore, I hope that the Minister will take on board some of the points that my right hon. and hon. Friends and I have made.

5.36 pm

Mr. Frederick Willey (Sunderland, North)

I support the speech of my hon. Friend the Member for Jarrow (Mr. Dixon). He has said effectively what should be said in the debate. I also congratulate the Minister. If my recollections are right, he was on the Opposition Front Bench on the last occasion that we discussed this matter.

The Minister made it clear that this Parliament will not carry out privatisation. That is a good thing. We were asked why the Bill was brought in early. I believe that it is for the same reason—to satisfy British Shipbuilders that it will not be interfered with for the rest of this Parliament.

However, what the Minister did not do was to explain why he was introducing the Bill. The measures were introduced for only a limited time. They were supposed to be once and for all. Why is the Minister extending them? My hon. Friend the Member for Jarrow gave the reasons. We must compare this country with other competing countries. There is no alternative but to help. That is Mr. Atkinson's view, and he has gone much further. He has made it clear, to me at any rate, that we will have to do something about Japan and Korea. That is why it is proper that we should spend some time looking at the EEC. We should have been told why the scrap and build programme was abandoned. We want to know what the EEC will do. The measures that are being taken now are helpful, but not nearly enough.

I have spoken along those lines since I came to the House. We have got to ensure fair competition. I spoke when British Shipbuilders represented more than half the world's shipbuilding capacity and it is material that really we deal with the matter.

I agree with my hon. Friend the Member for Jarrow about redundancy payments. We want an extension of those payments, but that is not enough. The help has been negative when we needed positive help. Associated with closures we need the provision of alternative work. That affects me in Sunderland. I am still concerned about Doxford's. What will be provided there? We probably have the two best shipyards in Europe. We have orders for as long as it is worth taking orders, but far fewer men are engaged in the yards than a few years ago. However, we want someone to take the responsibility and some provision to be made for alternative work. I am told that this is ridiculous, but it is not.

At present, we are receiving well over £100 million in unemployment pay. That is a large sum for one locality to receive. One out of every four of our men is out of work. There should be an association between the cost and the provision of alternative work. That would be a positive measure that the Government could undertake.

The present position is not a reflection upon the industry. British Shipbuilders has shown that management is important in industry, and we should give credit to Mr. Atkinson who has made considerable changes in management and great economies at headquarters level. However, there is still much to be done. We must go back to the discussions that took place when the Bill was introduced. There is still much to be done to get better industrial relations. They have been improved, but they must be further improved. We must ensure that the management is the best that can be provided.

5.41 pm

Mr. Ernie Ross (Dundee, West)

Like my right hon. and hon. Friends, I welcome this chance to discuss British Shipbuilders and the role of its work force and management. Clearly, as a maritime nation it is important that this, one of our basic industries, should be sustained and supported. All the signs show that we are gradually coming out of the shipbuilding recession, and the only way to be able to take advantage of that is by having a nationalised industry that is able to react and compete internationally. Since its restructuring, made possible by nationalisation, British Shipbuilders has worked miracles in a period of world recession. That comment was made in a pamphlet published last year by my union, the TASS section of the AUEW, entitled "The Future of British Shipbuilding". The comment is borne out by the end-of-year figures in the latest British Shipbuilders annual report, and the recent spate of merchant shipping orders.

Despite the tremendous problems facing British shipbuilding—opposition from the EEC, the high inflation level and the continued strength of sterling against the currencies of our main competitors in Europe and Japan—the corporation's losses for the financial year ending March 1981 were slashed. The annual report reveals a trading loss of £41.44 million, £68.49 million down on the previous year. When added to the intervention fund subsidy, the total loss was £85.54 million, well within the Government's loss limit of £90 million set at the start of the year. At the same time, the corporation used only £176 million, including the intervention fund money, of the £185 million external financing limit. Clearly the workers and the board are to be congratulated.

There is no disputing the financial summary of the chairman of the corporation, Mr. Robert Atkinson, who said: The corporation is achieving improvements and a steady reduction in the level of both losses and cash requirements. The congratulations of the House must not go to management alone. They must also go to the work force, which has made it all possible through its achievements. In recent years, strikes and stoppages have been well below the national average, with only 0.1 per cent. of man hours lost in the last year. Along with significant improvement in production—as the Minister conceded, an average of 15 per cent. in merchant yards—ships are now being delivered on or ahead of schedule at competitive prices. The House should congratulate the corporation and the work force on their efforts, encourage them and make clear that we intend to continue supporting the industry and to make it viable.

Warship building, the one consistently profitable division, has in recent years been almost entirely dependent on Royal Navy orders. According to the chairman of British Shipbuilders, the suddenness in the reduction of Ministry of Defence work will put at risk several thousand jobs. The loss of Royal Navy orders has prompted British Shipbuilders to renew its efforts to sell more warships abroad to take up capacity. But, as should be obvious to the Government and to the House, that takes time, special arrangements and a more suitable product range. Export orders will go only to nations that are willing to offer early delivery of a proven design that is already built. The United Kingdom has no production lines of general purpose frigates.

In May, British Shipbuilders submitted its corporate plan to the Government in which it attempted to chart a course of viability along which the corporation could progress. But the corporate plan was drawn up in a vacuum, without warning of the Ministry of Defence review bombshell. That is just one example of the United Kingdom's unco-ordinated approach to British shipbuilding.

Mr. Tristan Garel-Jones (Watford)

Is the hon. Gentleman saying that he regrets the review that has taken place and that he would wish the expenditure on defence to continue and to be extended? If so, that is a novel departure for the hon. Gentleman.

Mr. Ross

I should like to make it clear that while I have opposed the Government's defence policy, and shall continue to oppose it, nevertheless, at this stage, many of my colleagues in the trade union movement are employed in shipyards. They are anxious to diversify, but at present they are building ships. As I made clear earlier, I am speaking on behalf of my colleagues in the shipbuilding industry.

Mr. Orme

Is not my hon. Friend saying—this is a point that I should like to make to the hon. Member for Southampton, Test (Mr. Hill)—that the money that will be wasted on Trident and nuclear weapons to which we are opposed should be spent on conventional forces that will be needed for a considerable time and which will provide work in the workshops and shipyards about which he is talking? The money that will be thrown down the drain on a few nuclear weapons is a complete waste of public expenditure in Britain.

Mr. Ross

My right hon. Friend is, of course, correct. I would want to go further and diversify in the yards to use the skills of the work force there for other projects. There is not one Labour Member who does not wish to defend the country. But we wish to defend it for different reasons from those advanced by Conservative Members. We do not wish to defend it simply so that it can become an island and a battleground for the Americans. I want to defend it on behalf of the people who live here.

Mr. Hill

The hon. Gentleman obviously has the same problems that I have in Southampton. I went to the extent of saying earlier that, regardless of where surface warship orders come from, I would be prepared for British Shipbuilders to find the orders. Would the hon. Gentleman reciprocate on that?

Mr. Ross

Absolutely not. In no circumstances would I sell any type of warship to South Africa or Chile. Nor would I encourage any of my colleagues or hon. Friends to associate themselves with such a proposal. That has been the policy of previous Labour Governments on Chile.

The unco-ordinated approach which, unfortunately, has been forced on British Shipbuilders is one to which we object. The pamphlet to which I referred earlier argued for a national maritime policy. When my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) was Prime Minister, he designated the Lord Privy Seal as the co-ordinating Minister for maritime affairs. The Greenwich Forum has urgently argued for a national maritime policy, co-ordinated by a senior Cabinet Minister without departmental responsibilities who would be supported by a maritime policy staff and a senior official as full-time director. The staff would be seconded from existing Departments with major maritime interests, including the Ministry of Defence, the Departments of Trade, Industry and commerce and Transport, and the Home Office. Such a structure would ensure that Ministry and Government decisions were part and parcel of detailed consultation within the industry. Consequently, a corporate plan would be drawn up with full knowledge of Government intentions.

It goes without saying that my union utterly opposes denationalisation in any form. Our view on that has been expressed in other debates and in the TASS pamphlet. In July 1981, the previous Secretary of State, convinced by the financial realities of hiving off, drew back from precipitate privatisation. Nevertheless, as we heard today, it remains a major manifesto promise for Conservative Members. If they return to the subject, we assure them that there will be outright and total support from Labour Members for the views that I have expressed.

On a lesser scale, but of no less concern to Labour Members, there have been attempts in a minor way to hive off particular yards. I turn to the problems that I and my colleagues face in Dundee. The yard at Haverton Hill was closed and is now rented to a private company, William Press and Son. Part of the dry dock facility at Bingham and Cowan has been rented to two of its previous managers who have established a private company. Clark Hawthorn at Hartlepool is due for closure. In the previous financial year, £5 million was received from the sale of assets.

British Shipbuilders will stay intact only if it receives adequate Government financial support. A world-wide subsidy war is still being waged. One has only to consider Japan, which increased its shipbuilding production during 1980 by 1.4 million tonnes to 6.1 million tonnes and in April announced loans on a further 31 ships with a gross tonnage of 1.83 million, to be built in Japan under the latest shipbuilding programme which is even more preferential to Japanese shipbuilders. In July 1981, United States naval yards were given a further boost by the Reagan Administration with a plan to increase United States naval forces to 600 ships.

The United Kingdom leads the European shipbuilding nations, but it has been overtaken in the world lead by those countries which heavily subsidise their domestic industries. If we wish to have a strong, viable domestic industry in this country, we must do more for British Shipbuilders.

The hon. Member for Dundee, East (Mr. Wilson) referred earlier to the problems facing Dundee. A determined British Shipbuilders board has decided that the Robb Caledon yard will close and will not reopen under British Shipbuilders management. Thus British Shipbuilders seeks to end 108 proud years of shipbuilding in Dundee. Many people, myself included, are determined to ensure that that does not happen. The shipyard is as much a part of Dundee as the famous Tay Bridge or the Law Hill. It has trained and educated apprentices who have become the backbone of the light engineering industry of which we are so proud. That industry has attracted international and multinational companies to Dundee, many of which are currently experiencing a boom period, sustained by engineers trained in a yard which British Shipbuilders is determined to close.

I remember walking into the yard as a 16-year-old in 1958. It was like walking into an industrial museum, and I wondered whether I had stepped back into the 1900s. Yet in that industrial museum the work force has built ships at the very edge of technology, carrying its name and skills throughout the world where they are regarded with great admiration. We are determined that those skills will not be lost to Dundee.

There has been a history of misinformation from British Shipbuilders about Robb Caledon, Dundee—on productivity, finance and, most important, intention. British Shipbuilders has either misinformed people or deliberately had no intention of living up to its promises. The work force has been misled and deceived with promises which the British Shipbuilders board never intended to fulfil. Unemployment in Dundee has increased by 90 per cent. in two years of Conservative Government. At present, the odds against finding a job are 60:1 generally, but in engineering the figure is 280:1. For the 140 workers in the tenth week of their sit-in at the yard, the odds are even worse. Not only are there no shipbuilding jobs, but the alternatives are a 120-mile round trip to a yard at Dailly, or the upset and upheaval of moving permanently to another area.

There is some light on the horizon for those workers, however. A company in Dundee with a very good record in oil-related construction work wishes to take over the yard if British Shipbuilders does not reopen it. The company is having difficulties, however. It would be helpful if the Minister would take note of some of the difficulties being experienced by Kestrel Marine in discussions with the port authority and convey them to his right hon. Friend the Secretary of State for Scotland, who has nominees on the port authority whom he might influence or even direct. At the very least the Secretary of State for Scotland should discuss with them how best to proceed. If British Shipbuilders is determined to keep the yard closed, the skills of the Robb Caledon work force, which has proved its ability and flexibility over many years, should not be lost to the city. Kestrel Marine should at least have the opportunity to take over the facilities and the work force and to expand.

The present problem seems to be that Kestrel Marine requires to take over almost the entire 21-acre site on the waterfront currently occupied by Robb Caledon. The port authority, rightly and responsibly, is concerned that if it reassigns the lease on the yard to Kestrel Marine, a private company, the site might not be developed to its full potential. I have said publicly that I accept the importance of the port authority carrying out its responsibilities and assuring itself that if the lease is reassigned the developer intends to develop the site to its full potential, but there seems to have been a breakdown in communications.

The potential developer, Kestrel Marine, has a good and proven record and is among the top three companies in oil module work in this country. Kestrel Marine wishes to build a flow line module-building production site on the present Robb Caledon site and to be linked with its existing facilities, thus doubling capacity almost immediately. It is currently quoting for orders based on the probability that it will be able to take over the site. If there is to be development at the site, that proposal by a company with a proven record in this sphere would have the support of the people of Dundee. Certainly for the workers at the yard it offers at least the hope of long-term employment.

I hope that the Secretary of State for Scotland will read the debate and that the Minister will pass our comments on to him, as I know that there is to be a meeting tomorrow, called by the local authority, bringing Kestrel Marine and the port authority together to try to iron out the difficulties. That meeting will be followed by a meeting of the port authority on Friday to take the final decision on reassignment of the lease on the site. It is extremely important that everyone should be concerned with the best long-term interests of the area and the skills at present unused in the yard.

That will in no way remove the difficulty that still exists—the failure of the British Shipbuilders board to accept the Blackpool agreement and its contents. Ultimately, there will have to be a decision about its intention to break that agreement and to force redundancy on to the 140 employees presently in that yard. That argument will have to be settled, but it is an argument that the unions are quite capable of discussing and handling with British Shipbuilders.

We on the Opposition Benches welcome the Bill, although it does not go far enough. However, in Committee we shall be able to convince the Government of the need to increase the limits in the Bill in the best interests of the British shipbuilding industry.

6.1 pm

Mr. Frank Field (Birkenhead)

I follow my hon. Friend the Member for Dundee, West (Mr. Ross) in expressing support for this measure but I must say that it is a funny little Bill. It deals with two aspects of the shipbuilding industry. The first aspect is the external finance level and the second is the time limit for the redundancy payment scheme.

My hon. Friend the Member for Whitehaven (Dr. Cunningham) asked why the Bill was being introduced now. What is so important about the external finance level or the redundancy payment scheme's time limit when there is no pressure on either front? Hon. Members may object to the way in which the Government have brought forward this measure while failing to provide the House and the industry with crucial information. Hon. Members needed to know what the Government's plans are on defence spending. To have a shipbuilding debate without that information is like trying to perform Hamlet without the ghost. For some of my constituents, that information is a ghost.

I believe that I am correct in saying that the industry put its corporate plan to the Government in May 1981 but has not yet had a response. At first, we understood that there was no response because the Government were reviewing their defence strategy. Indeed, they reviewed their defence strategy and announced their changes. During the Navy debate before the Summer Recess some hon. Members wondered, if the Government went ahead with changes—and the cost of Trident continued to rise—whether further cuts would be inevitable in the Navy budget. We were assured before Parliament rose for the Summer Recess that there was no chance of the Trident budget escalating. Since then we have learnt that the Trident budget has increased by about £1 billion. Will the Government tell the House why there is such a long time lag between the submission of the British Shipbuilders corporate plan and the Government's reply?

The missing ingredient in the debate has been the Government's position on Navy orders and without that crucial piece of information we cannot make sense of what will happen to the size or structure of the yards and the long-term future and prosperity of this key industry. All hon. Members, not least those with constituents working in the industry, have a right to know when the Government will make up their mind. One has only to think back over the past few years and to the role that defence expenditure has played in restructuring the industry to see how crucial the restructuring has been. The Minister and many of my hon. Friends have paid tribute not only to management, but also—and correctly—to the workers. They paid tribute to the part that they have played in restructuring the industry. If I were pedantic, I would refer to ex-workers and the part that they had played in restructuring industry. There has been a decrease in our labour force of between 19,000 and 20,000 men. It is they who have borne the cost of restructuring British Shipbuilders. However, they made that sacrifice only because they were assured that the industry had a long-term future and that any redundancies would be voluntary, not compulsory.

Because the Government cannot make up their mind about the size of Navy orders in the coming years, we do not know whether the policy of voluntary redundancies will continue or whether the Government will shortly embark on a policy of compulsory redundancies. If the Government force British Shipbuilders down that path through major changes in their naval defence strategy, the House and the country should realise what is being lost. I have a personal interest because I have the privilege of representing Birkenhead and its major industry is shipbuilding. In the past few years we have seen the cuts that other yards have experienced and we have also seen a shortened order book. Yet with that shortening order book there has been a considerable increase in productivity.

When the first order was issued for a type-42 frigate the Ministry of Defence decided on an eight-year building period. Cammell Laird was given five years, but it completed the order in four years. That happened at a time when men felt that they might be working themselves out of jobs. However, they responded to the Blackpool agreement—they felt that they had a future and that changes would not be forced, but would come about through voluntary agreements. In the House and in speeches around the country the Prime Minister often asks for such changes in productivity. How can we allow an industry to perform in the way that we wish it to perform and yet fail to come up with a long-term future for it?

I do not apologise for labouring the fact that we cannot discuss a long-term future plan for British Shipbuilders until we know the Government's plans for the Navy. The Minister is not in the Chamber and has probably been called away on business. However, in his opening speech he showed the speaking skills that we have come to expect from him as a Minister. However, he also showed the schizophrenic face of Thatcherism. On the one hand, he told us that the Government were getting tough with the industry, but he failed to mention that world output is only one-third of what it was in 1975. The Minister spoke of the loss target for 1979–80 of £100 million being reduced after intervention fund support to £25 million this year. That was the tough side. On the other hand, to cheer up his hon. Friends—particularly the hon. Member for Southampton, Test (Mr. Hill)—he pointed out how generous the Government had been to the industry and mentioned that financial support had reached £500 million.

These are interesting figures, but none of us could make any sense of them. It is impossible to make sense of a declining level of support or a squeezed level of intervention fund support unless the Government set the target for the industry. By "target" I mean how many ships will be built in the next few years and how many people will be involved. There is no point in wiping out the subsidy to the industry if at the end of the period there is no industry to support and no industry to work in. The figures were quite unrelated to the Government's expectations for the industry in the next few years. I sympathise with the Minister who will reply to the debate. How can he give answers to those questions unless the Ministry of Defence has informed him of the size of the Navy contribution over the next few years?

I echo the plea made by my hon. Friend the Member for Whitehaven. If, as we should, we are thinking about planning a long-term future for this industry, we should not only be concerned with this measur, which is not even required bearing in mind the time scale involved. We should be considering bolder reforms, a number of which were referred to by my hon. Friend.

He talked about the present level of capitalisation in the industry. Hon. Members will be shocked if they compare the level of capital investment in the Japanese shipbuilding industry this year with the level of investment in some of our shipyards. It is a privilege to speak in a shipbuilding debate, because my hon. Friend the Member for Jarrow (Mr. Dixon) always participates. One of our strengths is that we have hon. Members who know something practical about the industry. That certainly applies to my hon. Friend. He compared the wooden wheelbarrows that are still used in the Jarrow shipyards with the £600 million investment this year in the Japanese shipyards. When that is compared with the level of orders won by British Shipbuilders, one wonders what the industry might win if our workers received only half the level of support that Japanese workers get from their banks and Government.

My hon. Friend the Member for Whitehaven also referred to the need for incentive schemes to get firms to order with British yards. I was interested to hear the intervention of the hon. Member for Chichester (Mr. Nelson). He suggested that the support currently given to shippers should go only to those who place orders with British yards. Will the Minister respond to that positive suggestion?

I also echo the plea for a planned programme of public sector orders. The industry got that under the last Government. I make a modified plea to the present Government. We would just like some public sector orders, whether they are planned or not. We must also look at the EEC programme on scrap and build. Given that we are an island Power, I am sure that all hon. Members agree that we shall need a shipbuilding industry in the next century. In that case, will we be able to guarantee a future unless we push this debate in the institutions of Europe? Will we be able to debate the size of the current level of British shipbuilding if all the suggestions that have been made are not acted upon?

I support this measure. Like many other hon. Members, I wonder why we are discussing the Bill at the present time. I make a powerful plea for a real debate on shipbuilding as soon as possible. However, we cannot have such a debate until the Government have made up their mind about the level of Navy orders for the next decade or more. The crucial question now asked by workers and management alike is when we shall be given that information.

6.13 pm

Mr. Tristan Garel-Jones (Watford)

I apologise to the House, particularly to the hon. Member for Whitehaven (Dr. Cunningham) and my hon. Friend the Minister of State for not being present at the beginning of the debate, but a number of constituents came to visit me. I also apologise for leaving the Chamber from time to time, but, as hon. Members are probably aware, certain business is taking place upstairs that is of some interest to the Conservative Party.

I am pleased to follow the hon. Member for Birkenhead (Mr. Field). As we all expected, he made a serious and thoughtful contribution. He said that a debate on shipbuilding without precise figures on defence expenditure was rather like Hamlet without the ghost. With respect, there is something ghostly about the Opposition these days and their approach to many of these issues.

I listened with growing amazement to the speech of the hon. Member for Dundee, West (Mr. Ross), who referred to the fact that in his youth he had joined what he described as "an industrial museum". The hon. Gentleman is something of an ideological museum himself. I say that with the utmost friendliness. I was surprised at the force with which he said that he wanted to defend this country. However, I must ask him "From whom?".

We know that the hon. Gentleman wishes to defend us from Chile and South Africa. He certainly wishes to defend his constituents from any prospect of orders from those countries going to the shipyards of Dundee. But I am not clear about the group of countries from which the hon. Gentleman seeks to defend us. I sometimes suspect that he would like to defend us from the United States—our greatest ally.

Mr. Ernie Ross

I hesitate to delay the House because I have already spoken at length. I seek to defend us from the military-industrial complex that has grown up throughout the world and which wastes massive amounts of money on research and development on armaments that will never be used. Clearly, our shipyards could well do without Trident, as could the rest of our manufacturing industry.

Mr. Garel-Jones

No one would disagree with the hon. Gentleman's statement of principle. He is in favour of working for peace and towards a de-escalation of the frightening arms race. He is saying that we should be involved in the slow and gradual process of reducing the size of the arms industry. No one disagrees with that. However, whereas the hon. Gentleman is firm and open about the fact that British Shipbuilders should not accept orders from Chile, South Africa or regimes of which he disapproves, presumably he and his hon. Friend the Member for Jarrow (Mr. Dixon) have no ideological resistance to the selling of ships to Poland. Presumably, the hon. Gentleman finds Poland more ideologically congenial to his point of view. However, the selling of ships is in this case a euphemism, because they were tantamount to a gift. I take it that the hon. Gentleman approves of that.

Mr. Field

Let me ask a ghost-like question. To which clause is the hon. Member for "Watford Dock" addressing his remarks?

Mr. Garel-Jones

I am indulging in the customary courtesy, when time is not too pressing, of referring to the speeches already made by hon. Members. I am making the point that a great ideological difficulty faces the Conservative Party as the party of Government when considering propositions made by the Labour Party.

I listened to the speech of the hon. Member for Jarrow with great care. The hon. Gentleman has an experience and direct knowledge of these matters that I cannot share. Like him, I give a warm welcome to the Bill, principally because it raises the financing limits for British Shipbuilders from £500 million to £700 million, with the likelihood of a further £100 million being made available.

I welcome that simply because it underlines the fact that the Government are not ideological in their approach to these industrial matters. In some ways, I wish that the money expended by the Government in supporting our nationalised industries was publicised to better effect. I feel that from time to time my right hon. and hon. Friends on the Front Bench have perhaps been too apologetic over the way in which we have supported our nationalised industries.

I am slightly concerned to see that the redundancy payments scheme is to continue for two years beyond 1983. That shows that further redundancies are expected, and that must be a matter of regret to all of us.

I do not expect to find any echo from Labour Members to my concern that my hon. Friend the Minister of State, Department of Industry, has not been able to come forward with any proposals for the privatisation of the industry. Unlike the hon. Member for Jarrow, I do not regard nationalisation of the industry as having been a wise step by the previous Government. The Minister may have touched on this point in opening the debate—if so, I apologise—but I fear that the vast majority of the money already voted for British Shipbuilders—and perhaps much of what we are now making available—has been spent on covering the losses that have taken place in the nationalised industry since vesting day.

I am aware that both the management and work force in British Shipbuilders have taken great steps forward in making that industry more productive and much more competitive. Clearly that must be the case. Nineteen thousand redundancies have already been achieved with the co-operation of the trade union movement and, while it has obviously been a painful process, it is part of the constructive approach of the trade union movement.

The shipbuilding industry's order book has been going through an enormous world-wide crisis in the last 10 years. It is showing some signs of picking up. I do not regard that as being tremendous ground for optimism for the future. There may be a very short rise in the graph, but demand may not run as high as we would like or need for a number of years. There are still grave difficulties facing the British shipbuilding industry. There are problems towards the reduction of which, I accept, both the management and the unions have made significant contributions. If and when a pick-up in demand comes, I am sure that we shall be in a position to take advantage of it.

Labour Members will be aware that for a number of reasons it has always been difficult to measure productivity in the shipbuilding industry. When my hon. Friend replies, will he tell us, if the figures exist, to what extent productivity is better now than it was when the firms involved were part of the private sector? In spite of what the hon. Member for Birkenhead said, and in spite of the improvements that we all recognise are taking place, I fear that productivity now, compared with productivity before nationalisation, does not paint such a happy picture as we might hope for.

My final point concerns industrial strategy and the way in which it would affect not just our shipbuilding industry but all the industries in which Governments have, of necessity, a role to play. Before doing so, I must make another ideological point. I listened with respect to the hon. Member for Jarrow, who is a man with great practical experience in this industry. However, I detected in his remarks—and certainly in the remarks of the hon. Member for Dundee, West—an ideological lack of faith in and even enmity towards the capitalist system. When talking of industrial strategy, the first thing on which we all have to agree is that we are all trying to make a social market economy function better.

One of the difficulties that we face as a nation—and I say this with the greatest respect—is that many Labour Members do not believe in the social market economy, and see the purpose of their life as being to overthrow and destroy it. That is why they came into public life and that is why they came to the House of Commons.

Therefore, in discussing industrial strategy the first thing the nation has to know is whether the Labour Party is trying to make the system work better. The sooner the Labour Party settles its ideological difficulties, the easier it will be for debate to flow from both sides of the Chamber.

With regard to industrial strategy in general, the problem is that, because of the ideological battle, there are many Conservative Members who have a faith in the hidden hand of the market place which is perhaps slightly over-enthusiastic, and they find themselves in conflict with those Labour Members who wish to destroy the system. Frequently, discussions about industry have been related to those two poles. If we can start from the basis that on each side we are trying to make the system work better, then of course it is possible—

Mr. Harry Cowans (Newcastle upon Tyne, Central)

With the greatest respect to the hon. Member, I have never heard so much rubbish in my life. It is obvious that the hon. Member has never worked in a shipyard. Productivity has risen because at last the workers see that they have some chance of getting together and doing something about it. The hon. Member does not acknowledge that under his system the workers were held down for a very long time. Now, at last, workers are having a chance to contribute towards management, but Conservative Members are totally opposed to that.

Mr. Garel-Jones

What the hon. Gentleman refers to as my system is not my system. It is not a system that is exclusive to the Conservative Benches. It is the system that I hope all hon. Members—and certainly the majority of our fellow citizens—believe in and support. It is the system of the social market economy. I do not imply for a moment that management has been perfect. I am ready to accept that if working people have been brought more into management decisions and discussions in the shipbuilding industry, that can only be good for the industry.

I am unaware of the hon. Gentleman's position in relation to the ideological divide. But he must know that I am not making a cheap party political point when I say to him that, sitting in this Chamber at this very moment, are two of his hon. Friends—they are perfectly entitled to their views—who are devoted to destroying the system.

Mr. Cowans

That is rubbish.

Mr. Dixon

The industry always failed when it was in private hands. When the industry was nationalised in 1977, that was the first time that the workers has a chance to have some say in the industry and some co-operation with the management of it. But prior to that capitalism failed in the shipbuilding industry.

Mr. Garel-Jones

My point is perfectly clear. The majority of Conservative Members—and, I believe, still the majority of Labour Members—wish to make the system under which, broadly speaking, we live and prosper work rather better than it does at the moment. That implies that my hon. Friends and I cannot be ideological in our approach to nationalised industries. We should try to make nationalised industries succeed and certainly try to involve the work force more. I am not making a cheap ideological point when I say that it is difficult to talk about consensus industrial policies of the sort we need when there is a division among the Opposition on whether the object of the exercise should be to make the system work.

Mr. Ernie Ross

We shall send the hon. Gentleman a copy of our industrial strategy and it will all become clear to him.

Mr. Garel-Jones

The hon. Gentleman's industrial strategy is well known to me. I only wish that it were better known to the public. However, the strategy propagated by the hon. Gentleman and his right hon. Friend the Member for Bristol, South-East (Mr. Benn) is gradually getting across to the public, and the hon. Gentleman must ask himself whether that explains some of the difficulties that his party is experiencing. However, I do not want to be drawn any further on that matter.

We have to accept that when British Shipbuilders or any other great enterprise in this country competes for contracts overseas there is no such thing as a totally free market. We know that other Governments provide soft loans and other forms of industrial assistance.

We need to follow the example of the United States, Japan and France and set up a system in which the Government, the trade union movement, industrialists and the banking community can have sensible discussions about the strategy that we ought to pursue, whether in shipbuilding, steel making, coal mining or any other industry. That sounds good, but occasionally it may have to be decided, as it has been decided in Japan, that, say, the shipbuilding industry must be run down and the computer industry given more help. Such decisions are difficult, but we shall not be in a position even to start considering whether we should take that sort of decision until we get the industrial consensus to which, I fear, the Opposition are incapable of making the contribution that they could and should make.

6.32 pm

Mr. Ron Brown (Edinburgh, Leith)

I assure the hon. Member for Watford (Mr. Garel-Jones) that I do not intend to join the Tory Party or the SDP—the semi-detached party.

Mr. Garel-Jones

Just join the Labour Party, Ron.

Mr. Brown

Perhaps the hon. Member lived for too long in Franco's Spain. His ideas do not attract me in any way.

All Labour Members agree that shipbuilding is important to our economy, and it is certainly important to my constituents. Therefore, I welcome the Bill, limited though it is.

We must consider the history of the industry. We all know that the previous owners neglected and abused it for a long time. In the good days, fast profits were made, but there was little investment. The attitude of the old owners was to chase a fast buck, wherever it could be found, and usually to send capital out of this country. Unfortunately, that attitude still prevails in other parts of the economy.

After nationalisation in 1977 the old owners were given a golden handshake in return for their daylight robbery. I regret that it was a Labour Government who provided those golden handshakes. The capitalist system conned that Government, but I do not believe that, despite the view of the hon. Member for Watford, any future Labour Government will be conned.

Recently, a Labour Member—I cannot remember his name—spoke about nationalisation without compensation. He was spot on, and the argument should have applied to the shipyards, for which the nation has paid dearly. The yards were run down and many were using antiques for machinery and equipment. Things were so bad that it was rumoured in 1977 that Arthur Negus was thinking of applying for the job of chairman of British Shipbuilders! Many yards were held back because they did not have the necessary equipment.

Some hon. Members will point to exceptions and claim that not all owners took the same view. I accept that, but generally the previous owners did not look after the yards; they abused them and made extremely high profits from them. Since the setting up of British Shipbuilders the new management has tried to make up for the neglect and abuses of the past. New techniques are being introduced, but about 20,000 workers have lost their jobs and many closures have taken place.

We have to tell the Government and the management that that process cannot continue. That is why I support the Robb Caledon workers at Dundee. They have a right to fight for their yard and their jobs. They realise that redundancy payments, however generous, only buy a place on the dole queue, and in Dundee, many other parts of Scotland and the North of England, workers face a lifetime on the dole. Official figures tell us that we have 3 million on the dole. That is not strictly true. The real figure is 4 million or 4½ million, and if we include youngsters on so-called youth opportunity schemes the figure becomes almost incredible.

Our present desperate plight breeds pessimism in many parts of the country. The Prime Minister speaks at banquets about hopes for the future, but she is really saying "Bankers rule, OK?" The CBI does not agree with her. It pointed out in a recent survey that 77 per cent. of its members were working below capacity and that there has been a 15 per cent. cut in investment. The prospects for the future look pretty grim and the CBI sees no light at the end of the tunnel. A record number of companies have gone to the wall since the Government took office.

It may help to put matters in perspective if we recall that 30 years ago British shipbuilding was doing well and Britain controlled 25 per cent. of world trade. Today, it is unlikely that we control even 10 per cent. of world trade. That is a measure of the decline of our economy and of the problems that face us.

There is a feeling among people outside the House that things will go from bad to worse. The words "recession", "slump" and "crisis" are on their lips. They are right to take that view. The extent of the crisis can be seen in the British merchant fleet. In 1975 our fleet totalled 50 million deadweight tons. In March, this year, the figure had been reduced to 35 million deadweight tons, indicating to what extent this country has slipped down the plughole. It is claimed that we are an exporting country. One can see how the industry has been affected. One can appreciate that ships are not being produced because ships are not being bought by British owners. Private enterprise has failed in the past. It is failing again. The animal should be called by its real name. We are really talking about the capitalist system. It is a system of society that is unfair, corrupt and inefficient. It cannot produce the goods. It is not the system of society that Adam Smith spoke about. Today, it is dominated by big business.

What is Labour's answer? Conservative Members have repeatedly asked this question. What we say, or, at least, what I say to the shipyard workers, is that I believe and we believe in nationalisation because it is vital to get the economy going. When we say that, we should not simply argue the point that what has gone before is good enough for the future. Old style nationalisation is not gool enough. We have to democratise industry. We have to introduce workers' control into industry. If we agree with Nye Bevan, we should be taking over the commanding heights of industry in order to help British Shipbuilders. We do not agree, surely, that 20 per cent. of the economy should be in public hands. The percentage should be far greater.

The Labour Party has to argue for a bold Socialist policy. This means taking the fight outside. It is a question of realising that we have to show to people outside that we mean business. It is a question of action rather than words. It is a question of telling the union leaders to stop backpedalling with this Government. Every hesitation only encourages the Government and their big business backers. They become more arrogant every time that trade union leaders back pedal.

This is a matter that we, as a party, have to spell out. This party of ours has to give a lead. That lead is for the working people. If that is done, I am pretty sure that we shall be backed by the working people. They would include the shipyard workers in Leith and also the Robb Caledon workers in my area who certainly back a fighting, campaigning Labour Party. They are sick to death of the Government's attack on jobs and living standards. The Government have sown the seed and will reap the class whirlwind. The message for our supporters should be that if all pull together this Government and their rotten backers will be blown into the rubbish heap of history.

6.43 pm

Mr. Gordon A. T. Bagier (Sunderland, South)

Like many of my colleagues, I wish to intervene for a few moments to welcome this small Bill. After hearing the opening speeches, I had to leave the Chamber for a short time to attend meetings, which means that I have not heard all the debate. I shall, therefore, address my remarks to the opening speeches.

I have the same worries as those expressed by my hon. Friend the Member for Whitehaven (Dr. Cunningham). My hon. Friend questioned the extension of redundancy payments from six to eight years at this stage. He wondered why it was so imperative to produce the Bill now. Some of the remarks made by the Minister about the efficiency of shipbuilding seemed almost to eulogise the fact that 20,000 redundancies have occurred inside the industry. I find no great joy in that situation. Nor do my colleagues. Those redundancies have been achieved, by and large, with the co-operation, if not entirely the agreement, of the trade unions. The unions recognise that the shipbuilding industry faces great competition throughout the world.

I considered the Minister's opening remarks a little grudging. In some places, he gave plaudits. I join the rejoicing over the orders received in certain yards in Scotland and elsewhere. I wish, however, that the hon. Gentleman had managed some praise for what happens on Wearside, which has an excellent shipbuilding industry. Two companies on Wearside have successful order books lasting until 1983. Those companies have stumped the world to gain the orders. They have a first-class delivery record blotted only to a small extent by the steel strike, which was outside their control and which affected the supply of steel and marine engines. I hope that the Minister who replies will at least mention the record of those who work on Wearside.

The hon. Member for Watford (Mr. Garel-Jones)—I am sorry that he has left the Chamber—spent much time eulogising the capitalist system. The hon. Gentleman wondered why we are suspicious of it. We on Wearside have every right to be suspicious of it. We remember that before the nationalisation of the whole of the shipbuilding industry the shipbuilding yard of Sunderland Shipbuilders Ltd. had to be rescued from the capitalist system because of the collapse of Court Line. We do not need to look into a crystal ball to discover what happens inside the capitalist system. The shipyard section of the conglomerate was successful. Nevertheless, because of the crash of the holiday side of Court Line, it was in danger of falling into the hands of the receiver. It had to be taken, lock, stock and barrel, into public ownership by a Labour Government Minister to prevent loss of orders. We have bitter experience of the private sector in shipbuilding prior to public ownership.

The Minister brings forward the Bill grudgingly. He hangs over the industry the implied threat of privatisation at some future date. I could have explained to the hon. Member for Watford, if he had been here, why his colleagues are not interested in shipbuilding and privatisation. There is not enough money in it to hand over to their friends. It is not profitable enough. They would probably welcome the ploughing of more money into the industry to make it profitable and then for the bargain basement to be opened for their friends to cream off once again something that is successful.

It is not easy to make shipbuilding successful. I understand the difficulties of Ministers of both parties in keeping shipbuilding viable. It is the responsibility of a British Government to ensure that a maritime nation such as ours does not have to depend on overseas builders to build our ships. This fact has to be faced. If the Japanese can find it in their hearts to sustain their shipbuilding industry, and if the Spaniards and the Koreans can do the same, Great Britain can also do it. If any Government seek to allow the British shipbuilding industry to go down the drain through lack of resources, lack of understanding or through failing to appreciate that it is not possible to compete with both hands tied behind one's back, this is a situation that Parliament cannot tolerate. I hope the Minister will see that this does not happen.

I hope to hear a tribute from the Government to British Shipbuilders. Its management is stumping the world to achieve orders. It is a matter worthy of tribute that orders have been brought back from China and all over the world in the face of intense competition. Their success is due to the fact that the product is first class. The owner of a ship built on Wearside offered a holiday on a cruise liner to one of the work force so great was his appreciation of the quality and workmanship of the vessel. The chap has just returned from the cruise. His name came out of the hat. Good luck to him. I hope he goes on to win the pools and enjoys a prosperous future.

Although there is much carping about our shipbuilding industry, I hope that all hon. Members will congratulate British Shipbuilders on the excellent job that it is doing to gain orders from overseas. I also hope that the Minister will forget about privatisation. We who live in Wearside have nasty memories about privatisation and we do not wish to see it return.

6.50 pm

Mr. Neville Trotter (Tynemouth)

I apologise for not attending the debate earlier, but I was involved in matters related to the shipping industry.

The future of British shipping is a major factor in the future of the British shipbuilding industry, and I hope that we shall soon have an opportunity to discuss its decline. The decline is serious—from 50 million tonnes to just over 30 million tonnes. The fall has continued largely because of a change in world conditions adverse to Britain as a Western shipowning and operating country. The shipping industry needs a healthy shipbuilding industry, and the shipbuilding industry equally needs a healthy shipping industry. It is an added burden for British Shipbuilders that our shipping industry is at present in heavy seas. That is why it is so important that we should be successful in exporting.

I add my tribute to those already expressed by hon. Members to the efforts of British Shipbuilders. It has gone to the ends of the world and has returned with orders from some astonishing places. I noted recently an order from Brazil for six ships. I hope that it has been confirmed and that I am not premature in referring to it. There is much concern in the Brazilian shipbuilding industry because it is a low-cost producer of ships. British Shipbuilders has achieved a great deal in selling ships to Brazil, which is developing a shipbuilding industry of its own with the advantage of the low costs that come with lower industrial wages. There have been significant successes in exports because of a great effort, from the top downwards, in the marketing sector of British Shipbuilders.

Recently, there has been a considerable change in British Shipbuilders. The number of merchant berths has declined from 66 to 28. That is as much a sign of increasing productivity as it is of difficult market conditions. For the industry to be successful in the future it will have to concentrate its activity on a smaller number of berths and make better use of them.

Last year I was in Korea. I visited an enormous shipyard where the main method of launching was to float the ships out of the dock in the modern way, but there was one berth where the ship was pushed into the water. This berth was empty and I asked those concerned whether they built any ships on it. They told me that they built small ships on it if there was a demand for them. I asked them what size of small ship they were talking about, to which they replied, "20,000 tonnes." To me, 20,000 tonnes is a large ship, although it is not in the same league as a crude oil carrier of 500,000 tonnes.

I asked the representatives how many ships of that type could be built in a year. They said that they could build 12 such ships a year. I asked where they would build those ships. They looked at me as if I had not understood and said "On that slipway." They were geared to build 12 20,000-tonne ships on one slipway. That is the direction in which shipbuilding is moving in modern yards.

The hon. Member for Sunderland, South (Mr Bagier) will know that some yards in his area are moving in that direction. The trouble with being able to build 14 to 16 ships a year—as they can in the Sunderland yards—is that they must have many orders to keep the work flowing. Once a yard stops receiving orders, it loses productivity and efficiency. I believe that there have been hiccups in those yards but that the position has now been improved.

The productivity of British Shipbuilders during the past year was 16 per cent. higher than in the previous year. One should praise that, just as it is right to say that the improvement was long overdue. The right steps are now being taken to improve efficiency and productivity, which are essential to the successful future that all hon. Members wish to see for the industry.

The Bill, which provides more money to British Shipbuilders, was, I understand, not asked for by the corporation. It is unusual that a Bill providing more money should come before the House when the recipient has not requested it. I presume that the Bill is looking to the future rather than the present.

It would be discourteous to speak at length, having missed the earlier part of the debate, but I wish to mention warship building. Again, we have both home and export demand. About half our shipbuilding workers are engaged in warship building. Unfortunately, almost all of them are engaged on domestic and not export building.

Hon. Members will know the uncertainty which hangs over the Royal Navy's ordering programme and which makes it difficult for British Shipbuilders to plan ahead. The Minister also has some difficulty, because, although British Shipbuilders' plan has been with the Ministry for some time, whatever it says about warship building is irrelevant because the future size and shape of the Royal Navy is uncertain. I support my right hon. and hon. Friends in the Department of Industry in their efforts to obtain decisions from the Ministry of Defence about what sort of Navy we shall have, how many and what type of ships there will be and where they will be built. Those decisions must be taken soon.

I expect that we will build more type-22 destroyers at the Yarrow yard. They are good ships, although expensive. The main reason for building them may be to keep Yarrow alive although of course the Navy will welcome them. The type-23 frigate has been talked about for some time. There was a type-24, which was never built, and a type-44, which was so expensive that it did not last long even as a plan. I hope that we are not deluding ourselves. We are trying to solve problems that no one has been able to resolve and to produce an effective, cheap ship. There is no easy way of doing it. If we succeed, we shall produce a cheaper ship that is less effective, although we may obtain a 50 per cent. reduction in cost and only a 30 per cent. reduction in capability, but the Royal Navy will be less pleased with the ship.

It is easy to say that the Royal Navy has wanted ships that are too sophisticated and expensive for other countries, but the fact that Britain has not exported warships abroad in recent years is not the fault of the Royal Navy. I was recently on board a type-42 vessel of the Argentinian Navy, which the Argentinians built for themselves. They have another that was built for them at Barrow. Those are sophisticated ships—all the same as the latest equipment of the Royal Navy—and the Argentinian Navy can operate them very well. The officers and crew are of a standard similar to those on board HMS "Newcastle" or HMS "Sheffield", which are the same class of vessel.

Other countries have bought sophisticated ships from Britain, but they are now going elsewhere—for example, to Germany, Holland, Italy and France. Sometimes the ships that they buy are less capable than the latest equipment of the Royal Navy but sometimes they are not.

A Dutch frigate of the Kortenaer class will soon be sailing up the Thames—if she is not already there—and some hon. Members have been invited aboard later this week. Those ships are in the front line of vessels of that type. The Dutch have been able to sell them to other countries where Britain has not made any sales.

The Department should consider carefully what is holding back our warship sales. I do not believe that it is the complexity of their design. We must seek other explanations. I am pleased to see that British Shipbuilders recognises the need for action and that great effort is going into warship marketing. I hope that it will be successful. Many thousands of jobs in the industry depend on that success. Indeed, the future of at least one yard will depend on our obtaining export warship orders.

The industry has weathered a storm of immense severity and it is in good heart, although the storm continues. Those at the helm are coping in the best way possible. We must continue to support them and the industry in every way. It would be wholly wrong if we no longer built merchant and naval ships in this country.

7 pm

Dr. David Clark (South Shields)

I hope that Tyneside will not take it too unkindly if for once I agree with the hon. Member for Tynemouth (Mr. Trotter) on two matters. First, it would be unthinkable if we stopped building merchant or naval ships. Secondly, the hon. Gentleman complimented the workers in British Shipbuilders, who have operated in an almost impossible world scenario and have succeeded. As my hon. Friend the Member for Whitehaven (Dr. Cunningham) said in his thoughtful and constructive speech, most of that success has been with export orders. The hon. Member for Tynemouth and I not only sit on opposite sides of the House. We also represent constituencies on the opposite banks of the Tyne. But he and I agree on those two matters.

In my constituency on the Tyne many men work in shipbuilding and repairing, so I welcome the Bill. I should be horrified not to have had such a measure. I looked at two reports this week—the 1934 report into unemployment in the North-East and the Hailsham report of 1963. The North-East would readily say "Come back, Lord Hailsham, we desperately need you."

My hon. Friend the Member for Jarrow (Mr. Dixon), whose constituency surrounds mine, spoke eloquently and constructively. Male unemployment on Tyneside is one in four. It has almost reached the catastrophic proportions of 1934, when it stood at 30 per cent. It is now 25 per cent., not including the many youngsters on job creation schemes. If they were in the employment market, unemployment on Tyneside would be seen to be at the record level of the 1930s.

Shipbuilding and ship repairing are major sources of employment on Tyneside, so I was reassured to hear that there would be no privatisation this Session. My hon. Friend the Member for Sunderland, South (Mr. Bagier) mentioned Court Line. South Shields was at the sharp end, with the Tyne ship repairing group, which was owned by Court Line when it went bust. But for nationalisation those jobs would have gone. We want no large-scale privatisation on the Tyne.

I am sad and worried about the tardiness of public sector orders going to British Shipbuilders. How many hydrographic vessels have been ordered from the corporation? How many public sector orders have been placed with British Shipbuilders since the Government came to office? How many Ministry of Defence orders have been placed since May 1979.

Can the Minister assure us that the Government are in no way involved in blocking the EEC scrap and build programme? May we have a categorical assurance that they are in favour of the programme and actively support it in the Council of Ministers? Such an assurance would help all connected with the shipbuilding industry.

I am sorry that the hon. Member for Watford (Mr. Garel-Jones) is not in the Chamber. He made innuendoes about the Labour Party's defence programme. I cannot see the relevance of his point. We are talking about maritime shipbuilding interests. The only part of our defence programme that he could have been referring to was Trident. Almost all the parties on the opposition Benches are against building Trident, and I predict that eventually the Government will drop it. It makes no sense.

The Government state that the Trident submarines—we do not yet know which they will be—will be built at the Vickers yard in Barrow-in-Furness. They refuse to open the yard at Birkenhed. The Barrow yard is the only yard in which nuclear submarines will be built. So the Government's plan will interfere with the programme for the hunter-killer submarines. Two weeks ago a Russian submarine was discovered in Swedish waters. That incident illustrates only too well the need for detector submarines. By pushing forward Trident the Government are not helping our defences. A Labour Government would continue to build hunter-killer submarines at Barrow. Building Trident submarines will delay the hunter-killer programme by six years, because the Government have closed the option of building them at Birkenhead. The Minister should reassure British Shipbuilders about that important matter.

Mr. Trotter

Is not the most worrying feature of the old "Whiskey" class conventional submarine going ashore in Sweden the fact that it was equipped with nuclear torpedoes—a fact which appears to indicate that they are a way of everyday life with Russia? Are we, therefore, not right to maintain a nuclear deterrent?

Dr. Clark

I concede that. The "Whiskey" class submarine is basically a 1940s or 1950s vessel. It is beyond me to explain why it should have ended up in highly sensitive Swedish waters. I am not ashamed to declare that I am concerned about the fact that the Russians regard tactical nuclear and chemical weapons as an extension of conventional weapons. However, it is much more vital to have detecting nuclear submarines than submarines that give us an offensive independent nuclear capability. That adds nothing to our collective defence capability.

I want to end on a general point—the same point on which I started. In spite of the Channel tunnel that we are likely to have, and in spite of the development of the Galaxy aircraft and other aeroplanes, we must remember, as my hon. Friend the Member for Jarrow said, that seven-eighths of the world is maritime. Ships will be needed, certainly by Britain. Our European competitors are high-wage competitors, and they do very well. Another major competitor is Japan which is a low-wage economy. We should and can compete with Japan if we have the investment.

Shipbuilding should be one of our industries of the future. I therefore hope that every effort will be put into research and development, not only by British Shipbuilders, bur by the Department of Industry and the Department of Education and Science, in institutions such as the naval architecture department at Newcastle university, the South Shields marine and technical college, and other colleges and universities throughout the country which do much constructive work in this connection. I hope that the Minister can assure us in that regard.

The world will run out of oil, and we shall have to find alternative ways to power ships. The nuclear option is not the one that all of us want. As the Minister knows, there have been orders for coal-powered ships. I am talking not about stokers loading coal, but about sophisticated fuel mixtures of coal, oil, shale and water. So I hope that the Minister can assure us that he will give every encouragement to British Shipbuilders and individual agencies to press ahead in research in this connection.

British Shipbuilders is an industry in which we as a country should invest because of our geographical position, and because it is a basic industry. If shipbuilding runs down, our steel industry runs down. If the steel industry runs down, our coal industry runs down, and the domino effect goes on and on.

We—certainly those of us in the North-East—are telling the Government that the situation is almost as bad as the 1930s. We hope that they can give us a slender gleam of hope and offer us a small assurance that, for one industry in particular, they are willing to do something. I hope that the Minister will give us that assurance tonight.

7.13 pm

Dr. John Cunningham

I shall speak briefly, having spoken earlier in the debate. I shall summarise the arguments that my hon. Friends and I have put to the Government.

There has been unqualified support from these Benches for British Shipbuilders and the full maintenance of the corporation. Although the Minister of State made a passing reference to privatisation, he had little or no support, even from his own Back Benchers, when he raised that spectre in the debate.

There has been widespread support for the role that the trade unions and management together have played in the activities of the corporation. I reiterate my view that the Government should not lightly allow that situation to deteriorate, as there is some evidence that it may do, given the problems that exist. I take the point made by my hon. Friend the Member for Wallsend (Mr. Garrett) that we do not want a detailed Government involvement in industrial relations. Nevertheless, there is something that is worthwhile preserving, and the Government should do what they can to preserve those relationships.

Much emphasis has been placed on the inadequate investment in our shipbuilding industry. I welcome the comments of the hon. Member for Tynemouth (Mr. Trotter), even though they were made at the eleventh hour. At least he had the courtesy to stay in the Chamber, which is more than can be said of the hon. Member for Watford (Mr. Garel-Jones), who made a long, boring and irrelevant intervention very late and then promptly left.

It was right to emphasise, as did a number of other hon. Gentlemen, particularly my hon. Friends, that a massive lacuna is at the heart of British Shipbuilders, particularly in connection with defence orders for the naval yards. This hiatus has existed since the spring of this year because of the Government's decision to embark on the Trident programme, which is not welcomed by British Shipbuilders. It will seriously disorganise the corporation. It will distort operations in its yards, and there is now increasing evidence that the Government do not believe that they can proceed with Trident. The sooner that they reach that conclusion, inform British Shipbuilders of any change in policy, and get together a systematic naval ordering programme, the better it will be for British Shipbuilders.

There has been significant support from both sides of the House for the need to take a comprehensive view of British shipping and shipbuilding interests. I hope that the Minister in winding up will respond, at least in general terms, to what has been said in that respect.

I emphasise, too, that there has been precious little support for the activities and the policies of the EEC in the past two years. Of course, the intervention fund has been important, but it has played a decreasing role since the Government came to office. Little or no progress has been made on the other issues of EEC policy.

I reiterate the general welcome that has been given to the proposal to increase the borrowing limits of the corporation. We have still not had a real explanation for that increase, but I hope that we shall be given one in a few moments' time. However, there is considerable apprehension about the provisions to extend the redundancy payments scheme, not because we on this side are against redundancy payments, but because we do not view with favour even the slightest hint that further closures may be around the corner in British shipyards, coming as they would on top of a significant rundown in Clydeside, Tyneside and Merseyside, as has been made clear, particularly by my hon. Friends the Members for Sunderland, South (Mr. Bagier), South Shields (Dr. Clark) and Jarrow (Mr. Dixon), where male unemployment is already one in four of the population. We cannot accept that further redundancies should be declared in an industry which is now presented with opportunities when the Government do not take the initiative and enable it to grasp them.

To my sorrow and regret, there was a signal lack of any indication by the Minister of State that there was to be an intitiative by the Government to enable British Shipbuilders, not simply to survive, but to grasp the opportunities that we believe will be there.

7.20 pm

The Under-Secretary of State for Industry (Mr. John Wakeham)

The debate has been useful and interesting. It has ranged widely over the shipbuilding industry and British Shipbuilders. Occasionally I smelt the whiff of reselection in the air. Rarely have I heard the capitalist system spoken of so frequently as if it were a contagious disease. However, generally the debate was serious. Important points were made by many hon. Members, some of whom have worked for most their lives in the industry. The House is a better place for such debates by hon. Members who know about the industry and the people whom they represent.

The main purpose of the Bill is to increase the borrowing powers of British Shipbuilders from £500 million to £700 million. It is essential that Parliament controls those powers. The powers must be realistic and I shall attempt to explain why the Bill is necessary.

The second purpose of the Bill is to extend the shipbuilding redundancy payments schemes from 1983 to 1985. We have been asked why that should be necessary. The answer is simple. The Government's view is that it is better to deal with the matter in good time. That means bringing the legislation forward this Session rather than in the next when we might run into difficulties if the parliamentary timetable becomes congested. That is a practical reason for that part of the Bill.

Total borrowings are expected to be about £500 million some time in the new year. In shipbuilding cash flow is a problem. It fluctuates rapidly depending on the state of orders and completion dates. To provide for this, the limit is to be raised to £600 million because it is necessary to have some headroom.

The Minister who held my position in the Labour Administration said in 1979 that it was essential that the borrowing elements should be recognised well in advance because that gave more certainty to the industry and was therefore desirable. The last time that such a Bill was introduced there was criticism that we were running perilously close to Royal Assent and that the borrowing limits might have reached the peak.

It is curious that the hon. Member for Whitehaven (Dr. Cunningham) should be the first to query the need for the Bill, since he first raised the need for more investment. The hon. Gentleman is experienced and wise enough to know that investment requires cash and that increased borrowing is a likely part of increased investment.

Within the current external financing limit there is a plan for increased capital expenditure. Since nationalisation, of the £500 million of public money that has gone into the industry, about £100 million has been for capital investment. If British Shipbuilders had been able to contain its losses it would have had more money for investment. However, we believe that investment is important.

Substantial private investment took place in the merchant shipping yards before nationalisation, much of it financed under the Industry Act 1972. It was unfortunate that much of that investment was not fully used because of lack of orders. We hope that that aspect will improve.

The hon. Member for Whitehaven said that the industry had been held back by the Government. That is not so. The industry is working within the BS corporate plan. We hope that that can continue. The Government have not set the industry a target capacity for merchant shipbuilding. BS told the unions in 1979 that its target capacity was 430,000 compensated gross registered tonnes, employing 20,000 people. My hon. Friend the Member for Bosworth (Mr. Butler) told the House in July 1979 that BS would find it difficult to sustain that target capacity. Employment on merchant shipping is now about 17,000 people who produce about 350,000 tonnes a year. The industry could achieve a higher output if greater utilisation and productivity were achieved. It is wrong to say that the 350,000 tonnes output represents the industry's capacity. By any account, there has been a marked reduction in capacity and output. There are now 15 merchant shipyards in BS compared with 27 on vesting day.

Some people would like the Government to underwrite the capacity of the industry. That is not a proper function of Government. No one has the right to a job guaranteed by Government. The fact of nationalisation does not guarantee jobs in shipbuilding or elsewhere. We do not believe that it is practical for the Government to guarantee jobs. The only guarantee of an industry's jobs is commercial success.

British Shipbuilders has to face a reduction in naval orders. There are uncertainties about whether BS will be able to adjust in time. The function of Government is to decide how much aid the industry should receive. The industry has been receiving massive financial aid which we believe should and must be reduced. However, it is too early for us to come to a view about exactly how we should deal with the problems relating to the cut in defence orders.

I listened to what hon. Members said about industrial relations. A number of hon. Members on both sides commented upon the good industrial relations in the industry. I also noted the problems that they mentioned. Such matters are not for me but for the board of BS. However, the Government watch and hope that substantially better industrial relations will continue.

I agree that the Government should bring forward public sector orders wherever possible. That is what the Government have done. We have placed £40 million worth of orders since March 1980. That is a welcome addition to the merchant shipping order book. Other orders are on the way. It is not for me to talk about the defence programme.

Dr. John Cunningham

The Minister has seen the fly and missed the elephant. He is talking about £40 million worth of public sector orders compared with defence orders the value of which have dropped from £300 million to zero.

Mr. Wakeham

I understand the hon. Gentleman's intervention. However, the BS corporate plan was submitted to the Government in May. The White Paper was published in June. We must consider its implications. Of course, it will be in everybody's interests to decide how best to deal with the situation as soon as possible. Not only my Department is involved. It is impossible for me to give details today of how the matter is to be resolved. I understand the uncertainties.

My hon. Friend the Member for Southampton, Test (Mr. Hill) made his usual vigorous contribution. I guarantee that no part of the money will be spent on lifting the "Mary Rose" from the bottom of the Solent. However, his plug for that project may attract further contributions. He was right to stress that the Government are determined to support British Shipbuilders in every way that is reasonable and possible. He also stressed the need for British Shipbuilders to go out and gain more customers. He paid tribute to the excellent work done in recent years by the marketing sector of British Shipbuilders. He was right to point out the important part played by the EEC in trying to stabilise national aids to shipbuilding. I shall deal with that matter later.

My hon. Friend and a number of other hon. Members raised the question of Japan. The best way to deal with the problem is together with the EEC. With our fellow members, we shall take up the matter with the Japanese Government later this month. We shall again point out that it is in Japan's interest, as well as that of everyone else, that it should exercise restraint.

The hon. Member for Glasgow, Central (Mr. McTaggart) spoke with feeling about his industry. I am pleased that he thinks the redundancy scheme to be a good one. The £55 million that has been paid since 1977 has given some help to the 19,000 workers who have left the industry. I took note of his points on how the scheme should be changed. I cannot say that it is possible to change it, but his points have been noted. His remarks about training will, no doubt, be taken on board by British Shipbuilders. Because of his experience of the industry, his remarks will be seriously considered.

The hon. Member for Wallsend (Mr. Garrett) also speaks with authority on shipbuilding matters. He spoke about marine engineering and the corporation's plans for engine building which are being examined by my Department. His remarks will be considered. The hon. Members for Dundee, East (Mr. Wilson) and for Dundee, West (Mr. Ross), in their different ways, raised questions about Robb Caledon. I understand their concern. However, industrial relations is a matter not for the Government but far the board. The Government have no statutory power to intervene. I do not wish to shelter behind that statement. We do not believe that it is wise or sensible to interfere in these matters. I note the point about Kestrel Marine and the Dundee port authority. There are proposals aimed at trying to meet all the requirements of the site. The way forward is by discussion among the interested parties.

Mr. Ernie Ross

Does not the Minister accept that he has a responsibility in the matter? The Secretary of State for Scotland has nominees on the board of the Dundee port authority. The Minister should ask him to give them direction in the way in which the board assigns its assets. He could also give: direction inside British Shipbuilders. It is strange that the proposal for that site put forward by Kestrel Marine is exactly the same as that which all the organisations, elected representatives, and local Members of Parliament, the Tory-controlled Tayside regional council and the Tory and Labour district councils put forward to the Secretary of State for Industry in July 1980. That site should be developed. We want that direction to be given.

Mr. Wakeham

Nothing would do more harm to industrial relations than the Government interfering in that matter. It is a matter for the board of directors and the trade unions to resolve. The hon. Gentleman and I will have to differ. Kestrel Marine is not a matter for the Government. The discussions have not been exhausted. I hope that they will continue and reach a satisfactory solution.

The hon. Member for Jarrow (Mr. Dixon) speaks with great authority. He was right to say that the shipbuilding industry does not operate in a free market. All Governments give assistance to shipbuilding, and this Government are no exception. We have contributed £500 million towards supporting our shipbuilding industry, and there is more to come as the industry progresses. That is better than the aid given by a number of other countries, although it may not be as good as some. It is difficult accurately to compare assistance. The EEC has been trying to achieve some sense in the matter. The law of the jungle will not help anybody. We must try to restrain and control the levels of subsidies for shipbuilding on an international basis. We must try to make our industry more competitive.

On the EEC scrap and build programme, the Government made it clear that they supported the scheme discussed in 1979, provided a cost-effective method could be devised. Agreement could not be reached and since then, because of an increase in orders and a higher rate of scrapping, the case for the scheme has disappeared. We wish to encourage those who want to reduce the levels of subsidies throughout the industry.

The hon. Member for Jarrow and the hon. Member for Sunderland, South (Mr. Bagier) raised questions about the Government's help with home credit schemes. That echoes a request from British Shipbuilders and the General Council of British Shipping to make our home credit scheme more flexible. We do not intend to make it more favourable than the export credit scheme. However, within that parameter we shall do what we can to make it more flexible. If that means that we can help with some orders so much the better.

A number of hon. Members mentioned the EEC. There have been discussions about its role in shipbuilding. The majority of Opposition Members have little to say in favour of the EEC. When the previous Labour Government were in office they acknowledged publicly the inevitability of some contraction in the industry. The Commission's role has been to try to ensure that national subsidies are controlled as far as possible. We support that policy and we think that it has done a reasonable job in a difficult time.

Our objection to the Polish ships deal, to which the hon. Member for Jarrow referred, rested not merely on the excessive aid that went into it but on the harm that it did to our shipbuilding industry, which was the argument advanced by my hon. Friend the Member for Tynemouth (Mr. Trotter).

The hon. Member for Dundee, West is rightly concerned about the effect that defence changes will have on British Shipbuilders. Our industry used to enjoy a substantial business in exporting naval ships. The reasons for our market share falling so drastically are complex. However, chief among them is the fact that we were not competitive in the designs offered, in prices or on completion dates. I do not wish to make too much of this factor, but political difficulties played their part. However, in that area and in others British Shipbuilders is increasing its efficiency substantially. A new director of warship export marketing has been appointed. New classes of Royal Navy vessels, of which the Leeds Castle class of offshore patrol craft is the first, are being designed with greater export potential. Submarines and the type-23 destroyer-frigate will follow.

Mr. Field

The Minister has suggested that he knows what is taking place with defence orders. If he does, will he share rather more information with the House? He reminded us that British Shipbuilders submitted its corporate plan in May and that the Government published their White Paper on defence changes in June. Has the Ministry of Defence been able to tell the Minister and British Shipbuilders in outline the demands that it will be making on British Shipbuilders over the next few years? We understand that the costs of Trident have escalated by about one-fifth. Will that increase in costs have an effect on the original estimates which were submitted by the Ministry of Defence to British Shipbuilders?

Mr. Wakeham

The hon. Gentleman is persuasive but he cannot tempt me. I am not in a position to give him the information that he wants, for the straightforward and simple reason that the review and the consequences of the defence changes have not been completed.

Mr. Field

Is the hon. Gentleman saying that British Shipbuilders has no idea what demands may be made upon it by the Ministry of Defence? If that is so, can he give the House an idea of when British Shipbuilders will be acquainted with the demands that are to be placed upon it?

Mr. Wakeham

We are discussing that issue with British Shipbuilders. There are uncertainties and no final view has been formed. It would be unwise of me to anticipate the discussions that will take place. British Shipbuilders' corporate plan has been with my Department for some months and it knows the reasons for the delay. The corporate plan seeks to assess the prospects in the various markets for British Shipbuilders' products and to chart a course for the future in the light of the prospects. British Shipbuilders has tried to take into account the considerable uncertainties that cloud the outlook while recognising that the uncertainties make it extremely difficult to plan ahead.

The fact that the Government are prepared to put considerable sums behind British Shipbuilders' effort to become viable is proof of our confidence in its ability. We shall have to reach a judgment on how much money we should make available to back British Shipbuilders. We are not yet ready to reach that judgment. A number of factors have to be taken into account—for example, the industry's record and its progress towards viability. I assure the House that employment, industrial and defence considerations are being taken into account.

It seems that the new management and the work force of British Shipbuilders are to be congratulated on the progress that has been made. Perhaps the best way of judging a nationalised industry is to take into account its external financing limits, which for British Shipbuilders were reduced from £250 million to £185 million in 1981 and will be £150 million in the current year. It is forecast that there will be a further reduction next year. There were losses of £174 million in 1979–80 which were reduced to £85 million. They will probably be slightly less than that this year.

British Shipbuilders is to be congratulated on its better management, financial control, marketing and success in that marketing. There have been difficulties to overcome in the major restructuring that has taken place, but industrial relations have been such that the number of hours lost has been negligible.

There are formidable problems and British Shipbuilders is a long way from viability. However, the order book is better. Great efforts have been made. More sophisticated ships are being sold. Productivity is better. My hon. Friend the Member for Watford (Mr. Garel-Jones) was right to suggest that it is difficult to measure productivity in an industry in which the work load fluctuates considerably. It would be unhelpful to try to measure the level of productivity now with the level that was achieved when the industry was in private hands. However, it is certain that if the industry is to succeed in world markets, the level of productivity in future must be better than the present level and better than that which was achieved in the best days under private ownership.

The Government have backed British Shipbuilders with substantial funds. It is undertaking a difficult task in a highly competitive industry. Since nationalisation £500 million of taxpayers' money has been paid to the industry. British Shipbuilders' corporate plan has been submitted to the Government by the directors. Despite some doubts about the level of activity, the Government have backed the plan with cash. We are aware of the improvements and the problems. We shall continue to support the industry.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

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1. SHIPBUILDING [MONEY] 237 words
c217
2. AIRCRAFT AND SHIPBUILDING INDUSTRIES 26 words