HC Deb 26 July 1982 vol 28 cc862-77

12 midnight

The Minister of State, Northern Ireland Office (Mr. Adam Butler)

I beg to move, That the draft Shipbuilding (Redundancy Payments Scheme) (Northern Ireland) (Amendment) Order 1982, which was laid before this House on 2nd July, be approved. There are separate but identical Northern Ireland and Great Britain shipbuilding redundancy payments schemes. Both were made under the Shipbuilding (Redundancy Payments) Act 1978. Our objective is to facilitate the orderly reconstruction of the United Kingdom's nationalised shipbuilding industry by providing financial assistance for employees who in that process are made redundant or are transferred to less well paid employment in the industry.

The benefits available under the schemes are the same for workers leaving both British Shipbuilders and Harland and Wolff. We have just debated an order dealing with the position in Great Britain. The order before us now proposes amendments to the Northern Ireland scheme which will preserve the position in Northern Ireland on a par with that in Great Britain. Although my hon. Friend the Minister of State, Department of Industry, dealt at some length with the scheme for Great Britain, as some hon. Members may not have been present to hear his speech, it would be proper for me to summarise the main points of the order.

The main effects of the amendments will be to extend the scheme for two years to 30 June 1985 and to make all redundant employees who come within the scheme, notwithstanding their being under 40, eligible for lump sum payments with a minimum of £500. The over-40s already receive periodic payments as well as a lump sum and that reflects the greater difficulty that individuals in this age group have in finding other work.

The benefits for the over-40s are also being upgraded, essentially by amending the tabulations used for calculating the entitlements of individuals under the scheme. In addition to this, the maximum weekly earnings limit for the purposes of the scheme is to be 150 per cent. of the maximum under the employment protection legislation. That figure would currently amount to £202.50 per week and the change will mainly affect those in the higher wage and salary brackets, particularly staff employees.

Together with various technical amendments, the changes that I have outlined will ensure that Northern Ireland shipbuilding workers who become redundant will continue to be treated no less favourably than their Great Britain counterparts.

In considering Harland and Wolff's immediate prospects, the Government have decided that it would be prudent to make provision for enhanced redundancy terms for workers leaving the company in the medium term. That Harland and Wolff is facing a difficult future is well-known, and I cannot hold out any prospect of immediate or easy solutions.

In the preceding debate much reference was made to the condition of the shipbuilding industry world-wide. The industry has been affected by acute depression, with little respite for several years. Prospects for the medium term remain gloomy. Demand for new oil tanker or dry bulk tonnage is not expected to improve significantly until 1985 at best. Freight rates are currently at a very low ebb and the glut of oil tankers is well-known and is underlined by the large number of tankers laid up throughout the world.

Moreover, Harland and Wolff operates at an end of the market—in large, relatively unsophisticated ships—which is particularly exposed to Far East competition. A recent study by the Association of West European Shipbuilders of the Korean threat to our yards showed that it was precisely in large bulk carriers that the Korean yards had the greatest cost advantages over Western producers. At the same time, several shipyards, notably in the Far East, are planning to expand their existing capacity. The market is therefore most definitely not in Harland and Wolff's favour, and so the company must clearly take very determined steps towards greater competitiveness if it is to weather the present and forthcoming difficulties.

The Government are fully aware of the company's present position and prospects. We recently agreed a package of aid for Harland and Wolff under which more than £47 million from public funds will be provided to the company in the current financial year. That comes on top of about £270 million of assistance in all forms which has been provided to Harland and Wolff since 1966, and the total is now equivalent to over £600 million at today's prices. One has to ask whether such a sizeable sum of money could not have been better spent, in part or in whole, in support of other Northern Ireland enterprises, or put to reducing the overall burden of taxation.

Part of that £47 million of assistance takes the form of subsidies paid from the Harland and Wolff intervention fund. The fund is available to Harland and Wolff alone of Northern Ireland companies and is designed to enable it to match competition for orders by subsidising its costs. I am pleased, again, to tell the House tonight that the European Commission has very recently approved proposals which the United Kingdom Government put to it for continuation of intervention fund subsidies for Harland and Wolff until the end of this year at least. The Commission has agreed that, because of the special circumstances of Harland and Wolff in particular and of Northern Ireland generally, we may continue to grant subsidies to Harland and Wolff at present levels—that is, up to 18 per cent. of the contract price of each ship—whereas other British yards may receive aid up to the lower figure of 15 per cent. This concession will apply only to large ships—Harland and Wolff's speciality—because, as I have just said, they are the subject of the strongest competition from the Far East. The Commission has also agreed that the amount of money which may be used to subsidise new orders will remain at £10 million for commitment on an annual basis, whereas the amount available to other yards has been reduced. The level and amount of subsidy will have to be reviewed towards the end of this year, but I am hopeful that the subsidy will be renewed.

The Government—and, I might add, the European Commission—have therefore recognised the particular problems of Harland and Wolff and of Northern Ireland in general by providing a higher level of aid than is available for other shipyards in the United Kingdom. This aid should, we hope, give Harland and Wolff an edge over competitors in securing work in the near future. This and previous Governments have done an enormous amount to help Harland and Wolff to survive. That cannot be challenged.

But I cannot emphasise too strongly that the company's future, its salvation, lies not with the Government but in the hands of the company—management and work force—itself. The Government cannot instruct owners to order ships from Belfast; only competitive prices, a reputation for prompt delivery and high-quality ships can do that. We cannot provide the company with a base-load of naval orders, because warship construction is not compatible with Harland and Wolff's facilities and skills. We have been advised by independent business men of the highest standing that Harland and Wolff's prospect of any major diversification, switching emphasis to non-marine engineering products, is virtually a non-starter. I repeat that Harland and Wolff's salvation is in the company's hands: if it cannot produce the ships that owners want promptly, and at the right price, no one in the company can count on a secure future of stable employment at Queen's Island.

There is plenty of room for cost-cutting and improvements in delivery. The company's costs are far higher than they should be, and all too frequently it delivers ships late. That also contributes to major losses, which have to be added to the losses arising from the maintenance of production capacity far in excess of demand. All that makes it the more difficult for the yard to win a satisfactory level of new orders, despite the high levels of Government subsidy that are available.

The company must, therefore, strive towards two targets: first, it must lower its costs; and secondly, it must improve its delivery performance. The company has sought consultants' advice, 'which is now being considered by the board, about how it can cut its overhead costs and bring its facilities more into line with demand. That is critical if employment in a more efficient company is to be secured, and I assure the House that cost-saving measures will have the Government's full support. Savings must be made if the company is to survive. The company—work force and management—has a simple but very stark choice—cut costs or go under.

No Ministers and no one who has the first idea of the position that Harland and Wolff holds in Northern Ireland want to see the yard close, but it can close itself through being uncompetitive, through not cutting its costs sufficiently and by not winning orders.

The company must also strive also towards the second objective, which is improved performance. With substantial Government help Harland and Wolff is now working on two large oil tankers and a 170,000-tonne bulk carrier. Those ships are perfectly geared to the yard's facilities. I am sure that many potential buyers will be watching to see whether Harland and Wolff can perform to specification and date, just as the taxpayer will be looking for performance to cost as well. It is not the Government but all employees at Queen's Island who are being put to the test.

It will readily be appreciated that all this cannot be achieved without cost in terms of redundancies. Job losses there will be, there must be, if employment is to be secured for the majority. The choice is as stark as that for the whole company, management and work force: between a smaller, more efficient company and one which has effectively chosen to close itself.

The Government have, then, had to take those factors into account in deciding to recommend to the House an extension and enhancement of the Northern Ireland shipbuilding redundancy payments scheme.

I see no alternative to redundancies. They are essential in the battle for survival. They represent individual sacrifice and hardship. It is up to those who remain to make the sacrifice worth while. The order will help to alleviate the hardship of the individuals who lose their jobs, and I therefore commend it to the House.

12.13 am
Mr. Clive Soley (Hammersmith, North)

I listened with a deepening sense of gloom to the Minister's comments. He has just spelled out a sentence of death on Harland and Wolff that at best will be delayed. I listened with horror as he described the £600 million subsidy as something that could possibly have been better spent elsewhere. I listened with desperate anxiety when he talked about an 18 per cent. subsidy for Harland and Wolff compared with 15 per cent for the rest of the United Kingdom. What on earth is 3 per cent., given the extra transport and energy costs in Northern Ireland? The Minister's whole philosophy stems from the Government's absurd belief that they should not interfere with the economy of Northern Ireland or the United Kingdom as a whole.

We know from this debate and from the one that preceded it that the competition that Ministers talk about comes from countries whose Governments involve themselves in the planning, payment, investment and the production of ships. Yet the Government are abandoning shipbuilding in Britain and Northern Ireland and are abandoning those involved in the industry. The Minister has more or less said that he will pull out the plug if they do not cut their costs and pull themselves together. What are they supposed to do? Are they to make yet more people redundant? How small does Harland and Wolff have to become before it is viable? There is a work force now of about 7,000. What will it have to be if the company is to be viable? Will it have to be 5,000 or 3,000? Perhaps the company will have to contract to the extent of building rowing boats before it becomes viable. Is that what the investment in Harland and Wolff has been for?

In the previous debate the Minister said something that chilled me, and the Minister of State, Northern Ireland Office has said nothing to dispel my fears. The Minister of State, Department of Industry said that Europe has taken the decision not to subsidise, whereas we have been told in this debate that there will be a 3 per cent. increase in the subsidy for Harland and Wolff. If that is the Government's philosophy, the shipbuilding industry in Northern Ireland is doomed to die, and to die quickly.

If that is the decision that the Government have taken—having listened to the Minister I suspect that it is—it would be far better if they said so openly and immediately embarked on a massive policy of restraint and put money into other investment areas and capital projects to provide alternative employment. Nothing could be worse than letting Harland and Wolff die and doing nothing about it other than saying that it must put its own house in order. It cannot do so without full and detailed involvement by the Government in precisely the same way as Governments involve themselves in Japan, Korea, Germany, France, Spain and in all the other shipbuilding nations. One example was given in the previous debate of three orders being given to the Scandinavian yards. Until we take a similar approach our industries will die.

When Harland and Wolff dies, what will the Minister do? Will he pick on the next largest industry and say "Unless it gets its house in order it, too, will go to the wall"? If he adopts that approach, we shall go right through the Northern Ireland industries in that way. Indeed, that is what has been happening for the past three years. This is a desperate comment on the Government's economic policies.

The extension of the scheme for another two years is welcome in its own right, but it shows the seriousness of the position that the company faces. Where is the Minister in the fight for the replacement of the "Atlantic Conveyor"? In the previous debate we heard many appeals for the order to be placed in British yards. I can understand that, especially when the appeal is made by those who represent shipbuilding constituencies. One of the tasks of the Northern Ireland Minister is to try to get the order for Harland and Wolff. The company is capable of building a replacement for the "Atlantic Conveyor". If I lost the fight, I would argue that the company should be given the order to build the engine for the replacement vessel. Let us have some positive involvement by the Ministers responsible for Northern Ireland. The position in Northern Ireland is desperate. I have said many times that even the CBI in Northern Ireland acknowledges that the economy will not get off the ground again until the Government involve themselves in public expenditure programmes.

I am the first to acknowledge that it is difficult to identify the right programmes that will bring the best sort of employment and the best return. However, that is no excuse for inaction. That does not mean that Ministers should sit back and do nothing. The Minister of State has told us that £600 million of subsidy could well have been spent elsewhere. We are told that the subsidy is to be increased by a marginal 3 per cent. That will not touch transport and energy costs. It seems that that is all that the company will get. There was nothing from the Minister about a battle to get orders for Harland and Wolff, only a demoralising speech that spelt doom and gloom to the workers not only of Harland and Wolff but of all the associated industries that will die with that great company.

As the Minister said, redundancy payments soften the blow of unemployment but they do not necessarily resolve the individual's longer-term social and economic problems. A sufficiently large sum may give the individual a chance to find alternative work without undue hardship. Alternatively, combined with any savings that he or she might have, he might be able to start a small business or buy a shop, but that applies to a small number of people. The amounts of money that we are talking about are small for such encouragement.

The other matter that I should like to draw to the Government's attention, if they are serious about generous redundancy payments, is the absurd ruling by the Government through the Department of Health and Social Security that for supplementary benefit purposes there is to be a savings limit of £2,000. What does that mean? It means that if one gets a significant sum that brings one's savings to over £2,000, one has to spend that money before one can get supplementary benefit. It would be fine if one could invest the money in an oil painting or something that would increase in value over the years, but no one is talking seriously about that. Therefore, the person is faced with the choice of either getting no supplementary benefit, or of spending the money on things that he may not need or on luxuries that do not involve more important and long-term decisions. Therefore, that £2,000 minimum savings level imposed by the Department of Health and Social Security is a positive discouragement to use the redundancy money effectively. I should like the Minister to take up that matter with his colleagues and get that rule changed.

I note that article 3 is amended so that all employees are entitled to a lump sum worked out by age and length of service. That is a marked improvement on the fixed sum that was previously paid to the under-40s. I welcome that.

In the long run the Government will be judged by the way in which they have allowed British industry, above all in Northern Ireland, to die. They have stood back and said "You must put your own house in order". The Minister did just that tonight.

No one disputes the fact that industry can be run more efficiently and that improvements can be made. No one disputes that any of the successful economies of the world do not have a detailed and complex involvement by the Government, yet the Government have decided that that is no part of their job. To do that in Northern Ireland of all places is perhaps more than a crime—it is a sin against the people who have already suffered enough.

If the Minister is going to let Harland and Wolff die, a massive education and retraining scheme will be needed for the workers who lose their jobs, not only the workers from Harland and Wolff but the workers from all the dependent industries and small companies that cling on to it. If those 7,000 people lose their jobs, the multiplier effect on the rest of the economy will be gigantic. The Government complain about increased public expenditure, but the area of public expenditure that has gone up the most desperately and in a most uncontrolled way has been unemployment benefit. So what on earth are we doing, with 21 per cent. unemployed, saying that Harland and Wolff will die if it does not put its own house in order. A minimum of 7,000 people will go on the dole and all the other people in the affected industries that rely on it and the people who rely on the work force in Harland and Wolff spending their wages in their shops and on their businesses will suffer. That is a dangerous economic nonsense.

Much as I welcome the increases in the order, the Government have failed the country desperately, particularly in Northern Ireland. I want to hear why the Minister has not been fighting for extra consideration for Harland and Wolff, not just 3 per cent. but sufficient to make up for the difference in the transport and energy costs. I want to know why the Government are not fighting for the "Atlantic Conveyor" order and for the order for the engine of that ship. I want to know why they are not trying to arrange other orders, wherever possible, to keep Harland and Wolff working. When it comes to the crunch, people want not redundancy payments, but paid employment. That is not an unreasonable demand.

12.25 am
Mr. Peter Robinson (Belfast, East)

I am pleased to follow the official Opposition spokesman, the hon. Member for Hammersmith, North (Mr. Soley). He has put his finger on the pulse of the issue.

I listened to the Minister of State open this debate and I heard his colleague open the previous debate. I noted a distinct change in emphasis and presentation. The brave face put on by the Minister in the previous debate was not put on by the Minister in this debate. The Minister spoke of the difficulties. He said that there was no immediate or easy solution. He mentioned the acute depression, said that things were gloomy and warned that costs would have to be cut or we would go under.

I shall have to go back to Belfast and underline the Minister's comments. His were not the words of a Minister trying to encourage a work force to greater productivity. His were not words to inject enthusiasm into any would be shipowner who wants to place an order with Harland and Wolff. His words were prejudicial to any such project. His were the words of a Minister flying a kite and warning that he was about to close a shipyard. Anyone who reads the Minister's speech will understand that that is his message. His chilled and measured tones were more suited to a grave-side oratory. He spoke as if he were delivering the obituary at a funeral.

I have a constituency interest, but Harland and Wolff has an impact on the Northern Ireland economy as a whole as well as on a small area of East Belfast. At one time Harland and Wolff employed 25,000 people. It now employs between 6,000 and 7,000. Many thousands in other trades are dependent on the shipyards for employment. The Minister's remarks tonight will cause great concern, not only in East Belfast, but in the surrounding area.

What action has the Minister taken to try to get new orders for the shipyard? He says that greater productivity is needed. Even if the shipyard men work for nothing, they would not be competitive in relation to the Koreans or Japanese. Surely the Minister realises that there is a war between Korean and British Shipbuilders. Unless we have sizeable subsidies, Korea will wipe British Shipbuilders and Harland and Wolff off the market and take the whole shipbuilding scene to itself.

It is more economic to pay subsidies to Harland and Wolff than to close the yard and pay redundancy and supplementary unemployment benefits. Unemployment and supplementary benefits cost about £5,000 a year per man. It is much more beneficial to give a man a job so that he can do something useful, especially in Northern Ireland. What has the Minister done to inject new orders? There is a flurry every two or three years as the last order is about to go down the slipway at Harland and Wolff. We then search for another job for the men. Why not use the time when there are jobs in the yard to get other orders.

Too often the men hold on to the job that they have because they know that as soon as it goes they will join the dole queues. That does not help the productivity that the Minister wants to increase. Having heard the Minister's speech, the shipyard trade unionists will perhaps understand more readily why the Secretary of State has been so coy about dealing with their requests made to him.

Is the Secretary of State not keen to put the facts to the shipyard men, and has he left it to the Minister to do his dirty work, as it appears he has done, tonight? If the Minister deals with that matter when he replies, I hope that he will also pass on to the Secretary of State the trade unionist's request for an all-party delegation to deal with what the Minister acknowledges is a serious situation. The trade unionists and a delegation of all the political parties in Northern Ireland should meet the Minister and the Secretary of State uregently, in the light of the Minister's speech.

I was disappointed to hear the Minister say that Harland and Wolff would not be in line for any naval contracts. I do not accept that it could not be made into a yard that could take on that type of work. I must accept that it cannot do so at the moment, but with a little adjustment it could do so and be competitive at it. The Minister will recall that only a year or two ago the Royal Navy gave some repair work to Harland and Wolff, which it was able to carry out in the specified time. If it cannot be given shipbuilding work, it could be given ship repair work. What approaches has the Minister made to the Secretary of State for Defence about the matter? I trust that he is making every effort to get what work is available for Northern Ireland.

The Minister seemed to scotch the idea of diversifying the work done by Harland and Wolff. He almost threw it out without any further consideration. His predecessor set up a team to consider diversification. I know that several possible projects were considered. Is the Minister telling the House that none of them is a possibility, That Harland and Wolff can only build bulk carriers, must wait until such orders come along and that it may not tender for anything else? If that is his message, he should make it clearly. The message that will go from the House tonight will not be about redundancy payments. It will be the Minister's ultimatum to Harland and Wolff that it must cut its costs or go under.

12.32 am
Mr. James Molyneaux (Antrim, South)

Most right hon. and hon. Members will remember that when the shipbuilding industry was being nationalised by the Labour Government, we pressed strongly for the inclusion of Harland and Wolff, not because we were wildly enthusiastic about nationalisation—Harland and Wolff was already for practical purposes a Government-owned firm anyway—but because we saw great disadvantages in Harland and Wolff being left outside the larger structure.

The Minister said that Harland and Wolff has benefited because it has attracted a higher subsidy than other yards in Great Britain. That subsidy appears to have been attracted by bulk carriers—the only type of work that Harland and Wolff can be engaged in at the moment—not because it was isolated from or outside the rest of the United Kingdom.

I fear that Harland and Wolff will remain stuck with producing only one article unless that sense of isolation is removed. The Minister warned that there is a limited outlet for bulk carriers. We all know that. That is all the more reason why Harland and Wolff should be encouraged, perhaps even jogged a little, to look outside the mould in which it has become stuck.

The House is perpetuating that separateness by refusing to take the two redundancy payments orders together, as has been done previously. We pretend that there is nothing in common between shipbuilding in the two parts of the Kingdom. If Parliament behaves in that way, we can hardly complain if the two units grow apart or be surprised if the customers and potential customers regards the two as separate and distinct, and perhaps even as rival concerns. Is it any wonder that foreign shipping companies are perplexed when they are told that Britain's shipyards have been nationalised and made into one, when they have, in fact, been made into two?

We have been assured time and again that relations are excellent and co-operation is good between British Shipbuilders and Harland and Wolff, but may we have examples of where British Shipbuilders, in a spirit of unselfishness, has passed on to Harland and Wolff orders for building ships or manufacturing engines that British Shipbuilders could have done itself? In the absence of proof we have to assume that big brother is a greedy and at times selfish bully boy.

There was a curious incident around Easter time this year when a telex from a reputable source in Brazil alleged that British Shipbuilders' representatives there were doing their best to dissuade a ship owner from specifying Harland and Wolff engines in an order, apparently on the grounds, believe it or not, of the difficult political situation in Northern Ireland.

The Minister of State and the Secretary of State investigated the claim and concluded that they had to accept the denial of British Shipbuilders. The denial was made by Mr. John Parker, the deputy chief executive of British Shipbuilders. He is a person of the highest integrity, but he is hardly in a position to listen to all that was being whispered by his subordinates in South America.

It would be unfair to condemn those subordinates, because, even if the claim were true, they were doing no more than engaging in a commercial struggle with a rival concern, in much the same fashion as occurs in competition on free enterprise. The difference is that British Shipbuilders and Harland and Wolff are owned by the same Government, who have a responsibility to ensure that they do not lend support to one to the disadvantage of the other.

It has been said that much of the previous debate was taken up by demands that the Government should ensure that the contract for the replacement for the "Atlantic Conveyor" should go to a British shipyard. If that means a United Kingdom yard, that is all right by us. Harland and Wolff should be given a fair opportunity to tender, because that is precisely the type of vessel that it is equipped to build.

Many Harland and Wolff ships served in the task force and proved their worth and reliability. If Harland and Wolff had been encouraged to get out of the bulk carrier and tanker rut and to engage in defence contracts—I do not believe all those who say that the firm cannot do that—perhaps Belfast-built frigates and destroyers would have been less vulnerable than the ships that were lost in the South Atlantic battles.

I conclude with a reference to the curious relationship between the Government, perhaps in the role of employer, and the shipbuilding employees. The latter organised a meeting in Belfast as long ago as 27 March, to which they invited representatives of the political parties. As one who attended, I found it a very constructive meeting.

At that meeting it was agreed to request a meeting with the Secretary of State. I imagine that that request would have been on the Secretary of State's desk certainly within the week, as I received my copy four days later. The request had to be reiterated on 23 April, however, and it was not until 29 June that the Northern Ireland Office admitted that the letter—presumably the second letter—could not be traced. The replacement copy provided by the unions' sub-committee apparently did not reach the Northern Ireland Office until 11 June.

On 29 June, the Private Office set out the reasons why it was thought that it would be far more appropriate for the deputation to meet the Minister of State. The unions disagreed, not through any lack of respect for the Minister of State and his abilities but mainly because vital national decisions were involved and, understandably, they believed rightly or wrongly, that their views should be expressed across the Cabinet table.

In a letter to the Northern Ireland Office dated 6 July the Harland and Wolff shipbuilding sub-committee stated that it wished to put to the Secretary of State its views not just on Harland and Wolff but on the effect that any reduction or—God forbid—any closure of Harland and Wolff would have on the Northern Ireland economy in general. The secretary to the sub-committee concluded with the following sentence: I would therefore reiterate the importance of meeting the Secretary of State and would like to press him for his attendance at the proposed meeting and hope that our request on this occasion will be treated with the seriousness which it obviously deserves. On behalf of the Ulster Unionist Party, I support that plea and that straightforward request, for this reason. Speaking in another place last Thursday, my noble Friend the Minister of State forecast that devolution might not rule for 20 to 30 years. That may even have been wildly optimistic. Certainly, responsibility for Harland and Wolff will continue to rest with the Secretary of State and his 10 successors.

With that time scale in mind, I urge the Secretary of State to respond to the very reasonable request of the unions that is set out in the correspondence to which I have referred and has the backing of every political party in Northern Ireland. If the situation at Harland and Wolff is as serious as the Minister has warned us that it is, that is surely all the more reason for face to face discussions between Ministers and the work force upon whom so much depends.

12.43 am
Mr. Michael Brown (Brigg and Scunthorpe)

I wish briefly to emphasise one or two points that have been made. I have a constituency interest in this matter as my constituency supplies steel and is thus indirectly bound up with the fortunes of Harland and Wolff.

After the sombre speech of the Minister earlier, no one can doubt the seriousness of the situation at Harland and Wolff. If anything disastrous happened to that firm, it would be a tragedy for the economy of Northern Ireland, not just for the 6,000 to 7,000 people employed by the company, as the multiplier effect would cause thousands more people in Northern Ireland to lose their jobs as a result.

My hon. Friend the Minister is right to urge that everything should be done by Harland and Wolff to ensure that delivery of products is made on time and that the firm is as efficient as possible. No one can deny that the United Kingdom shipbuilding industry is not competing in the world market place in the way that the Minister and I would wish, but every country in the Far East that is involved in shipbuilding has absolutely no regard whatever for competitive pricing. Under no circumstances do they aim to make a profit. We must therefore recognise that if Harland and Wolff is to survive—I sincerely hope that it does because of the dire consequences that would result in Northern Ireland if it did not—it will not be against the backcloth of profitability. It could never make a profit and still compete against the Far Eastern countries that subsidise in a vulgar way, to the extent that they are grabbing orders without any regard to profitability.

In urging efficiency and the fact that the customer should be supplied with the product on time, I hope that the Minister wiI1 have regard to the fact that it is completely impossible for Harland and Wolff or any other British shipbuilding firm profitably to compete with Far Eastern countries whose Governments are intent on destroying what remains of the shipbuilding industry, not only in the United Kingdom but in Western Europe as a whole.

Earlier this year, some of my colleagues were fortunate enough to attend a meeting with the chairman of Harland and Wolff who, like the Minister, underlined the seriousness of tie situation. I welcome the fact that management consultants are at present in Harland and Wolff. From talking to the chairman, I believe that there is room for improvement in the company. It will be completely impossible for Harland and Wolff to compete effectively, and we have a duty to the people of Northern Ireland to recognise that fact. Harland and Wolff is one of our great traditional industries, and to this day is one of our largest employers. The devastation that would be caused to the Northern Ireland economy and to the social fabric of the Province if anything untoward happened is absolutely unthinkable.

A number of hon. Members have drawn attention to the need to encourage the Government and Harland and Wolff to consider the possibility of diversifying the product base. There is no doubt in my mind that we are putting a mill stone around Harland and Wolff so long as we encourage it to produce only a certain type of ship for which there is massive world overcapacity.

I sincerely hope that the Government and the Department of Industry will give every encouragement to the British Steel Corporation to place any shipping order with Harland and Wolff. I know that BSC wants to act commercially and that it is considering the purchase of a ship from the cheapest source. However, I hope that BSC will not dream of looking anywhere other than British Shipbuilders or Harland and Wolff. Indeed, the type of ship required by BSC could be ideally built at Harland and Wolff.

I wish to draw attention to the fact that men aged 57 and under will receive minimum payments lower than those of men over 62. As slightly younger people, likely to be made redundant at Harland and Wolff, will need more help than those approaching retirement age, the Government should consider some change in the balance of assistance.

12.50 am
Mr. James A. Dunn (Liverpool, Kirkdale)

I welcome the convert from Damascus. I do not know whether the arm of the hon. Member for Brigg and Scunthorpe (Mr. Brown) has been twisted. The Minister's speech was a message of despair. I appreciate tremendous problems that confront Harland and Wolff. These are not of its making.

The Minister has talked of expert advice that calls for improved efficiency, for reduced costs and for improved delivery times. These matters are obvious. If the Minister means what he stated, he should take account of the remarks of the hon. Member for Birkenhead (Mr. Field) who referred to the improvements and achievements at Cammell Laird. A sophisticated warship was completed in four-fifths of the usual time. There was an emergency. An all-out drive was made to provide the ship at the time it was needed to defend the interests of the United Kingdom in a far-off place.

Those workers will not benefit from the improvements. They will find themselves in the same position as those employed at Harland and Wolff. We should not deceive people. The more efficient people sometimes are, the quicker they work themselves out of employment. I recall the expert advice given to the previous Government and their predecessors about the types of ship best suited to be built at Harland and Wolff. It can be seen how gravely we were misled. Some of my former colleagues may not share that view. To limit ourselves to bulk carriers and tankers was probably not the answer, although the so-called experts were loud in their pronouncements that this was the case.

It is a fact that the Japanese are now worried about the Koreans and the Koreans are worried about their competitors. We are talking about price competition. Our specialised shipbuilding industry cannot hope to compete in terms of cost with nations that have a large reserve of cheap labour, not always highly skilled but trained to carry out part of a prefabrication process. The hon. Member for Brigg and Scunthorpe (Mr. Brown) expressed some anxiety about steel supplies to Harland and Wolff. Not only that firm but the entire shipbuilding world is involved. Other nations seem to find an answer to that. They protect their shipbuilding industries by imposing an additional charge upon imports of either raw materials or the finished product. Perhaps the time has come to examine that system more carefully, although I have grave reservations about it.

Although I welcome the improvement in redundancy payments, if they prove necessary—the Minister's message tonight makes that almost certain—perhaps he should return to the experts who are responsible for the present position, or move closer to the experts who advise him, and say "Take your finger out and if you cannot advise on what should be done about shipping, you must advise about diversification in steel fabrication or other areas that will meet a market demand?" If he cannot do that, perhaps he should take the advice of the hon. Member for Hammersmith, North (Mr. Soley) and devote his energy to providing retraining facilities and more job opportunities, and close his ears to all the experts who misled me and who may have misled him.

12.56 am
Rev. Ian Paisley (Antrim, North)

The Minister has cast great gloom over the shipbuilding industry in Northern Ireland. I believed that we were hearing an obituary notice for the shipyard, because if the ultimatum that he placed before it is taken seriously, the shipyard must close. It is not possible for it to cut its costing seriously, nor is it possible for the shipyard to become competitive because of what has already been said by both Conservative and Labour Members about the unfair competition from the Far East. If the shipyard is to obtain orders and to sell itself to those who are interested in giving orders for ships, the Minister should carry the flag and inject confidence into the industry. But by his speech tonight he has cast a great question mark over the future of the shipyard.

The fact that the shipyard is not part of British Shipbuilders is a great disadvantage. I agree with the hon. Member for Antrim, South (Mr. Molyneaux) that those of us who sat together in bygone days were all worried about the isolation of Harland and Wolff. What we said has now come true.

Mr. J. D. Concannon (Mansfield)

I shall tell the hon. Gentleman and the hon. Member for Antrim, South (Mr. Molyneaux) about some of the benefits that I said would accrue from "Ulsterisation" of the shipyard, as we called it at the time. The order for two bulk carriers from BP would not have gone to Harland and Wolff had it been within the confines of the British shipbuilding industry. We could not have concluded the Mann Engineering deal, nor could we have fought off the EEC directive to get rid of 2,000 workers from Harland and Wolff when the Labour Party was in office. Those are three matters that we had in our minds in protecting Harland and Wolff, and keeping it under the Northern Ireland Office, so that we could control and manipulate the situation in favour of the work force at Harland and Wolff.

Rev. Ian Paisley

It will always be a matter of argument. We see the isolation of Harland and Wolff. The right hon. Gentleman's example, in which we were all concerned, caused us great heart-searching about British Shipbuilders' efforts to keep orders coming to Harland and Wolff. Had we been included, we should surely have got part of the cake, and we could have fought for part of the cake.

The position of the shipyard and its workers should be put clearly. The Belfast yard works is up against great difficulties, as the right hon. Member for Mansfield (Mr. Concannon) knows. Transport and energy costs tell against its competitiveness, compared with other shipyards in the United Kingdom.

Surely, there should now be a response to the long called-for meeting between the political parties in Northern Ireland, the trade union representatives, and the Secretary of State and the Minister of State. Why has there been this long delay? My hon. Friend the Member for Belfast, East (Mr. Robinson), in whose constituency the shipyard is situated, wrote to the Secretary of State asking why the meeting had not taken place. He tells me that he has received no reply. As the hon. Member for Antrim, South (Mr. Molyneaux) said, all the political parties and the trade unions were anxious to have a meeting.

There is great gloom at present in Northern Ireland. The Lear Fan operation has a question mark over it. Now, tonight, we have the sad news about the shipyard. What will it be tomorrow? Surely, it is now time to have an urgent meeting so that the matter can be spelt out. Is it not to be regretted that the Secretary of State did not take the matter on board sooner? I hope that the meeting will take place soon, so that we may know the facts. I trust, therefore, that the Minister will tell us what he has in mind for the proposed meeting.

1.3 am

Mr. Adam Butler

Inevitably, and quite properly, this debate has dealt more with the industry than with the immediate problems to which the order refers—amendments to the redundancy payments scheme. I shall deal quickly with two or three points and then come to the tone of my opening speech and the message that I delivered.

First, in answer to what the hon. Member for Antrim, North (Rev. Ian Paisley) and others said about a possible meeting between my right hon. Friend and the Confederation of Shipbuilding and Engineering Unions and others, it is regrettable that, apparently, a letter was mislaid. On the other hand a reply certainly was sent, in the first instance, suggesting that as the Secretary of State had met the CSEU on several occasions and that it was apparently entirely a shipbuilding matter, the Minister directly responsible, namely, myself, should see the CSEU on that occasion.

As one would expect, the Secretary of State has been extremely generous with his time in seeing various trade union deputations and those from other bodies. I believe that he had in mind anyway, and certainly as a result of representations made tonight, to ask me to suggest to the CSEU that a meeting might be appropriate if it were to cover an area of interest falling within its own field, which is large within the Province, going a bit further than simply Harland and Wolff. That seems to me be the right way to leave that matter.

Several hon. Members have raised the question of what Harland and Wolff should build. Criticisms have been made of the decision by I think, the previous Administration, but I am pointing no fingers, that Harland and Wolff should concentrate on the larger vessels. At one time that seemed to be the right decision. It happens, as I have said, to be in that area of the market—the large oil tanker and dry bulk market—that there is the biggest depression.

Mr. Concannon

To put the record straight, I assure the hon. Gentleman that the decision to go in for that market was made long before the decision for direct rule in Northern Ireland.

Mr. Butler

The right hon. Gentleman is right to correct me. As I said, I am pointing no fingers in this matter. It happens that the facilities at Harland and Wolff are excellent for that purpose. However, there is no reason why it should not, if it so chose, tender for smaller vessels. It follows that because the facilities are specially designed for larger ships, it will carry some additional on-cost if it turns its hand to the smaller vessels. It must judge the balance between the metal work and outfitting as usual. That is a choice that the yard itself will have to make. It is in the context of the intervention fund that the Commission has agreed that vessels over 100,000 tonnes deadweight should attract the higher rate of support.

Sir John Biggs-Davison (Epping Forest)

In his earlier speech my hon. Friend gave the impression that it was out of the question that Harland and Wolff should tender for naval vessels. Is that really the case? It used to build ships for the Royal Navy. It has not done so in recent years, but is it impossible for it to adapt to that?

Mr. Butler

My hon. Friend took the words out of my mouth. I was coming to the question of naval orders. I am advised that Harland and Wolff's existing facilities are not suited for naval ship building. Any yard can be adapted, but the capacity for naval ship building in the United Kingdom is, I am informed, more than adequate for the purpose. Indeed, there has been some reduction in that capacity in the mixed yards. I doubt whether it would be right to spend the necessary sums of money to put Harland and Wolff in a position to make naval ships.

However, Harland and Wolff is fully capable of refit and repair work on the Royal Fleet Auxiliary vessels. It is only in the past few days that I have again impressed on the Ministry of Defence the facilities that Harland and Wolff has and the dire need for orders of that sort. I hope that we can achieve a response in that area. My right hon. Friend the Secretary of State and I have probably been involved in most of the limited numbers of orders that have been floating around within reach of Harland and Wolff. Indeed, my right hon. Friend personally takes a close interest and gives help where it is proper for him to do so.

Mr. Soley

Will the Minister make an effort to get the "Atlantic Conveyor" order for Harland and Wolff? If not, will he make an effort to obtain the engine order for that firm? If not, why not?

Mr. Butler

The hon. Member for Antrim, South (Mr. Molyneaux) said that the "Atlantic Conveyor" was just the right type of ship for Harland and Wolff. However, although one has the impression that the "Atlantic Conveyor" was a sizable vessel, it was below the minimum size that Harland and Wolff has set out to build. Nevertherless, bearing that in mind, there is no reason why it should not tender for it. I understand that its price for such a vessel was very much in line with that of British Shipbuilders. My hon. Friend the Minister has made clear and confirmed the substantial difference in the tender price between British Shipbuilders and the competition from the Far East. The House heard what my hon. Friend had to say on that.

To revert to the theme of my remarks, hon. Members chose to hear what they wanted to hear and did not take in the whole of my speech. That frequently happens to ministerial speeches. I spoke with extreme realism, and in no sense did I give a message of despair. In no sense was my speech an obituary for the yard. I reject absolutely that it is ministerial intent to close the yard, and what the hon. Member for Hammersmith, North (Mr. Soley) said, when he accused the Government of abandoning Harland and Wolff, of pulling out the plug and of standing back from Harland and Wolff, is nonsense.

As I reminded the House earlier, in this year alone the Government have put £47–5 million behind the company. Last year we put £46 million behind the company, and the previous year, £42–5 million. Those figures do not include such things as standard capital grants, shipbuilders' relief and the cost of owner's credit, and so on, although they were included in the total figure of £270 million. This year's figure of £47–5 million represents about £7,000 per employee at Harland and Wolff. That can hardly be seen as abandoning Harland and Wolff to its fate. It represents substantial Government support.

Nevertheless, we must be realistic. If the company is unable to obtain orders with that level of support, and to get orders with 18 or 20 per cent. support as well as the credit arrangements available, there must be a question mark over it. However, the question mark is not as big as many hon. Members have said, because of a matter to which I have drawn special attention and which has often been highlighted. I refer to the scope for improved performance.

Ministers may have repeated the message time and again, but if the taxpayer is to put such sums into the company, the least that he is entitled to expect is that the management and work force will do everything that they can to help themselves. That is the message that I gave from the Dispatch Box tonight. We know, just as the work force and the management know, that there is room for improved efficiency and for cutting waste and overheads. They probably do not need consultants to tell them, but consultants help to pinpoint the areas of improvement. there is scope for enormous productivity improvements in that yard.

That is the message that I gave tonight. Given those improvements and the continuing Government support, the yard can carry on, but if those improvements are not made the company will not obtain the orders that are there to be had. The Government do not intend to close the yard. The only thing that will close it is lack of orders. I wanted to put the message across firmly, but in a balanced way, so that the yard listens not just to the sad voices that came from certain parts of the Chamber, but to the Government's realistic appraisal of the position.

Mr. Soley

The Minister has only himself to blame if he is worried about that image. Did he not say that the £600 million could have been used in better ways? He has just refused to back Harland and Wolff to win the order for the "Atlantic Conveyor". What does he expect the people of Harland and Wolff to believe?

Mr. Butler

There are many people in Northern Ireland who ask, as I asked rhetorically tonight, whether some or all of that £600 million might not have been better spent in supporting other projects or to the taxpayer's benefit.

The Government have provided between £45 million and £50 million in each of the past three financial years. We have been prepared to put money behind the company. It is not reasonable to expect that one should continue putting such sums of money behind a company in perpetuity. It will be at somebody else's expense. That is a realistic approach to the problem, which the hon. Gentleman does not always share.

We are debating only the amendments to the redundancy payment scheme. I feel that the sums of money involved will be necessary, and that in those circumstances it is right to enhance payment to those who lose their jobs at Harland and Wolff. For those reasons, I commend the order to the House.

Question put and agreed to.

Resolved, That the draft Shipbuilding (Redundancy Payments Scheme) (Northern Ireland) (Amendment) Order 1982, which was laid before this House on 2nd July, be approved.