Shipbuilding and Ship Repair

HC Deb 19 April 1983 vol 41 cc215-58 7.13 pm

Mr. Stanley Orme (Salford, West)

I beg to move, That this House recognises the deep crisis in the shipbuilding and ship repair industries which threatens thousands of jobs; condemns the failure of Her Majesty's Government to introduce policies to sustain and develop these vital strategic industries; recognises the anger felt throughout the United Kingdom at the decision by Cunard to refit the Cunard Countess in a foreign shipyard; and calls upon Her Majesty's Government to change this decision and its policies for the industries.

Mr. Deputy Speaker (Mr. Bernard Weatherill)

I should announce at this stage that Mr. Speaker has selected the amendment standing in the name of the Prime Minister.

Mr. Orme

It is a disgrace that again the Opposition have to force the Government to debate the shipbuilding and ship repair industries. Time and again we have had to bring to the attention of the House the Government's wilful neglect of this and many other basic industries. Now, as the crisis in our shipyards gathers pace, and as the jobs of many thousands of shipyard workers are at risk, the Opposition have to raise the matter. We have asked for a statement from the Government, but have not received one. We therefore make no apology for speaking on behalf of the workers and regions that will be so profoundly affected by any further cutbacks in this vital industry. When I say "regions", I am talking about the northern region, Scotland and Merseyside.

I also mention the lobby in which shipyard workers and local authorities took part today, in defence of the shipbuilding and ship repairing industries.

Mr. Mike Thomas (Newcastle upon Tyne, East)

rose—

Mr. Orme

I shall give way a little later.

What is happening in shipbuilding is an indictment of the Government, their policies of neglect and indifference, and their complacency in the face of the industrial devastation that they have caused. We are told that another 9,000 are to be added to the 10,000 workers who lost their jobs in the shipbuilding industry last year. At the Harland and Wolff shipyard, another 700 redundancies have been announced, on top of the 1,000 job cuts announced last year, and short-time working is to be introduced in that yard from July.

The story is the same throughout British Shipbuilders, where 25,000 jobs have been lost overall. In Tyne and Wear, 20,000 people are employed in the shipbuilding industry, representing 15 per cent. of all manufacturing jobs in the country. It has been estimated that for every job in the shipyards there are three indirect jobs in subcontracting and servicing industries. So it is not a matter of isolated shipyards in different parts of the United Kingdom; manufacturing units in Manchester, Birmingham, Glasgow and everywhere else are affected.

Since 1977, British Shipbuilders have cut 7,750 jobs in Tyne and Wear, the most recent being the 1,200 at Tyne Ship Repair. Currently, there are about 5,000 former shipyard workers without jobs in the county.

Mr. Mike Thomas

rose—

Mr. Orme

Very well, I shall give way now.

Mr. Thomas

The right hon. Gentleman will know, like many of his colleagues, that I represent a constituency with two shipyards, one of which has been put on a care and maintenance basis, and that unemployment in shipyard areas exceeds 50 per cent. The right hon. Gentleman was not involved, but perhaps he can explain why SDP Members who attended what was supposed to be an all-party lobby — to which the right hon. Gentleman referred earlier—to support the cause of the shipyard workers, were abused by the chairman and also denied the right to speak to the lobby? Is it not an improper use of ratepayers' money to spend money on promoting a lobby for Labour party purposes rather than for shipyard purposes?

Mr. Orme

The hon. Gentleman is abusing the time of the House. My hon. Friend the Member for Whitehaven (Dr. Cunningham), who is to reply to the debate for the Opposition, and my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) did not address the lobby. [Interruption.] The hon. Gentleman must fight this battle somewhere else. I want to continue this serious debate.

Mr. Robert C. Brown (Newcastle upon Tyne, West)

rose—

Mr. Orme

Let us continue this serious debate, because we are worried about jobs in a vital industry. We must tackle the problem together.

When I referred to Tyne and Wear, I said that 5,000 shipyard workers are without jobs in the county. Nevertheless, a further 1,600 redundancies are being sought there—960 at Swan Hunter, 415 at Sunderland Shipbuilders, and 200 at Austin and Pickersgill. With unemployment running at 15.1 per cent. in north Tyneside and 19.6 per cent. in Sunderland, any further reductions in jobs will have serious implications for the local economy.

In Scotland in the Strathclyde region 21,000 people are employed in shipbuilding and marine engineering and thousands more are dependent on those industries. In the Inverclyde district it is estimated that 51 per cent. of all manufacturing employment is in the shipyards. More than 5,000 jobs have been lost throughout Strathclyde in recent years. Any further reduction in the industry, especially at Scott Lithgow and Govan shipbuilders would have serious consequences for the two local communities where unemployment is presently standing at 16.6 per cent. in Inverclyde and on average about 19.5 per cent. in Govan.

About 1,400 jobs at Cammell Laird on Merseyside are under threat. The House does not need to be reminded about the unemployment problems of Merseyside. Even this Government have been forced to recognise them. Despite the potential devastation that further redundancies may cause, there appears to be no guarantee that these latest proposals represent the final cut in manpower, and further reductions could be sought.

While all this has been taking place, the Government's so-called policy of non-intervention has allowed crucial orders to be placed overseas. First, there was the scandal of the Atlantic Conveyor order that provoked such an outcry that the Government were forced to ensure that it was placed with a British yard. Then came the Central Electricity Generating Board's cable-laying vessel. That order went to Korea. The Cunard Countess is the most recent ship to cause controversy. It is unbelievable that this Government can accept that this work should not be given to a British yard. The workers in British Shipbuilders were skilled, competent and hardworking enough to prepare in record time the ships sent to the Falklands last year. Are we now to believe that those same workers could not fulfil such an order? It is nonsense. The Government must intervene. They must not stand by and watch as British industry falls apart while orders go to Korea, Malta or elsewhere.

I say to the chairman of Trafalgar House, that great patriot who is in control of the Daily Express, that if Lord Beaverbrook were alive today and saw what was happening in Britain he would be astounded at the action of Lord Matthews.

In the past five years 56 per cent. of domestic orders have gone overseas. Hon. Members should compare that with the position in West Germany, which builds 82 per cent. of its own ships, while Italy builds 98 per cent. and Japan 100 per cent.

Following nationalisation, British Shipbuilders, the trade unions and the Labour Government evolved a corporate plan for the industry based on a changed market and world situation that would set the core needs so that Britain would have a potentially viable industry for the future. The plan was based on the knowledge that any capacity below 420,000 tonnes would not be sufficient to support a viable industry. This figure was confirmed by the present chairman of British Shipbuilders on 13 December last as the corporation's minimum capacity level. The target for the industry has therefore been established and accepted and requires the continuation of the existing yards and labour force.

The recent announcement of a further reduction in the work force with a threat of two major and four smaller yards being completely out of work by the end of 1983 would mean the complete destruction of the corporate plan and of the merchant side of the shipbuilding industry.

The intervention fund and the negotiations with the European Community no longer offer any viable options. To save the shipbuilding industry, emergency help is needed from the Government now and must be spread over the next two years. The Opposition expect the Minister to address himself to that crucial subject. Without that help, the capacity to produce merchant shipping will have gone.

British Shipbuilders has kept within its cash limits in the past three years, its productivity is equal to anywhere in Europe and it has invested more than £35 million in a computerised programme that is to be introduced during the next three years and will make it as competitive as any company in the world.

The future of the British shipbuilding and ship repair industry is at stake. The Government have previously been asked if they are prepared to see Britain lose its shipbuilding capacity completely or whether they would be prepared to take the necessary measures to ensure its continuance. The Government may not be concerned about the loss of jobs and attendant skills, but surely even they can recognise the need for a shipbuilding and ship repair industry capable of contributing towards the security of the nation.

The Government's complete lack of a maritime strategy is all too glaring. We are a maritime nation and must remain so. Britain needs a fundamental shipbuilding and ship repair industry. While other countries invest in and protect their shipbuilding and ship repair interests, this Government sit back and let ours die. Japan gives its domestic owners credit on 90 per cent. of a home built vessel's price spread over 12 years at low interest rates.

Lloyd's List today, as the Minister has probably seen, says: Japanese yards say prices are 15 per cent. below cost". So much for market forces within Japan, which is so often held up as the paragon of an advanced capitalist state. If Japan is underwriting its industry to that tune, the House has a duty to protect Britain's industry. Can any hon. Member see the French, Americans or Japanese allowing their industries to disappear before their eyes? The only action that this Government have taken in four years has been to pave the way for the privatisation of British Shipbuilders. They offer no suggestions, and advance no policies that will contribute to the survival of our shipbuilding industry. The Labour Opposition have these policies. We completely oppose any attempt to privatise British Shipbuilders and we will, as the next Government, reverse any such action. Like every other shipbuilder in the world, British Shipbuilders is wholly dependent on Government aid for its survival. As a matter of urgency, Government aid should be increased in the short term.

A scrap and build programme must be introduced without delay, which would make a massive contribution towards the present imbalance in demand and supply in shipping. Combined with a more limited new building programme, the contraction in shipbuilding worldwide could be eased.

Having talked to British Shipbuilders I know that it considers that in one or two years' time the chances of new orders and fresh building will be of no use if the yards that exist have been destroyed.

I know that many of my hon. Friends want to take part in this short but important debate. We demand some answers from the Government. The country can no longer afford to be fobbed off with the platitudes that we continually hear from Ministers. Those answers must be followed immediately by action to save the British shipbuilding and ship repair industry from complete collapse. I repeat that we need emergency help now, linked to the next two years. We are very much at the crossroads. Without action now the future will be very bleak not only for British Shipbuilders but for British industry and British people.

7.29 pm

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

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: recognises the serious problems facing the United Kingdom shipbuilding and ship repair industries; welcomes Her Majesty's Government's measures to sustain these industries and to encourage them to compete effectively in international markets; and condemns the Opposition's policies as entirely unrealistic and likely to undermine the long term objective of securing soundly based United Kingdom shipbuilding and ship repair industries. The right hon. Member for Salford, West (Mr. Orme) has made a sombre and serious speech, and I do not deny that the situation facing the British Shipbuilding industry is extremely serious. Indeed, I am glad to have this opportunity to make clear the Government's concern. The Government recognise that British Shipbuilders, as the right hon. Gentleman has said, is a very important, large-scale employer in many of the regions that are already hard pressed by high unemployment. There may be points of disagreement between the right hon. Gentleman and me, but there is no disagreement between us about the seriousness of the situation. Indeed, Sir Robert Atkinson has made that same point forcefully in recent weeks, and, as the right hon. Gentleman knows, I met Sir Robert this morning to discuss plans for the future.

I want to respond seriously to the points that the right hon. Member for Salford, West has raised and to reply to his points about the Cunard Countess order. I shall set out the facts of that case, but it is important, first, that the House should understand the background to the situation now facing United Kingdom shipbuilding. The market for merchant ships slumped in 1982 to a level equivalent to about half the available world capacity. We all know what is happening to freight rates and new orders. More that 80 million deadweight tonnes of shipping— equivalent to 1,460 ships, including 348 bulk carriers and 355 tankers —are currently laid up. That amount of laid-up tonnage is equivalent to two years' world output at present levels. With such an overhang of capacity, it is extremely unlikely that the expected upturn in world trade will have any impact on the market for new ships until about 1985 or 1986.

I stress that the crisis in merchant shipbuilding is not confined to the United Kingdom. World wide, new orders fell by one third in 1982. The total world order book is the lowest since 1978, and much of that order book is due for delivery in the next 12 months. Yards are in difficulties throughout the world. Major Japanese yards—to which the right hon. Member for Salford, West referred—have recently been ordered by their Government to cut output to 74 per cent. of capacity. As anybody who reads Lloyd's List will know, the difficulties that British Shipbuilders faces, and that the right hon. Gentleman has described, are paralleled in yards in Germany, Holland, Sweden, France and Italy.

The market for ship repair has also been depressed for several years, partly as a result of changes in transport technology, of which containerisation is the most obvious example. However, the main problem for the ship repair industry has been the worldwide recession in shipping. There has been a marked contraction in ship repair in this country. Some firms have greatly improved their competitiveness, but it remains to be seen how far they will be successful in regaining lost markets.

The world shipbuilding industry is suffering from vast over-capacity. Even now, some newly industrialising countries are adding to that capacity. We have deplored the expansion of shipbuilding capacity in Korea in a period in which the shipbuilding industry worldwide has been in almost continuous crisis. Any decision to add to capacity at this stage harms the interest of the world's shipbuilding community as a whole, and we, along with other countries in the EC, have been strongly critical.

As I have said, Japan has agreed to reduce its capacity, but we remain concerned that Japan continues to take a disproportionate share of world orders. Within the OECD we and our European partners have kept up strong pressure for Japan to exercise restraint in shipbuilding activities in the spirit of OECD resolutions to which Japan is a party. However, hon. Members must be clear about why far eastern yards are so competitive. In large part their success is due to the substantial advantages that can be found in having established new, modern industries from scratch and to having efficient working practices, low labour costs and a highly disciplined labour force.

Dr. John Cunningham (Whitehaven)

How can the Minister talk about being competitive when, as Lloyd's List has told us, the Japanese admit that prices are 15 per cent. below cost? Is that competitive?

Mr. Lamont

The hon. Gentleman should not think that British Shipbuilders has not also been quoting below cost. The intervention fund is specifically designed to enable British Shipbuilders to quote below cost. I do not disagree with the hon. Gentleman if he is saying that shipbuilding worldwide is a business in which Government and subsidies are involved. I have never disagreed with him about that. However, the hon. Gentleman has got us nowhere merely by quoting that article in Lloyd's List. Indeed I noticed that that article also said that Japanese yards could not continue for long with the prices currently pertaining in the market for their ships.

Dr. John Cunningham

It is not good enough for the Minister to lecture shipyard workers in this country about productivity and competitiveness and to say in the next breath that he acknowledges that market forces are not operating worldwide.

Mr. Lamont

With great respect, that does not follow. Subsidies pervade the shipbuilding market worldwide. However, it is also true that we must have regard to our competitiveness and productivity. The fact that there are subsidies among our competitors does not mean that we need not try to attain the same productivity levels as them. Our productivity levels are clearly below those of the far eastern yards. The chairman of British Shipbuilders would not disagree with that.

The effects of far eastern competition are felt throughout Europe. I stress that we must find a solution through a Community-wide policy. We operate within the framework of an EC directive on shipbuilding. At present, member states are by no means agreed on a common line on a subsidy regime for shipbuilding. The hon. Member for Whitehaven (Dr. Cunningham) is a reader of Lloyd's List and he will know that the Government of Germany have rejected a plea from the Hamburg yards for more subsidy, on the ground that the industry must become more competitive, have more flexible working practices and increase productivity. Therefore, it will not be easy to obtain an agreed EC line. However, I stress that a solution must be found within an EC regime.

Although Opposition Members may regret that, they should remember that there would be no point in having unilateral subsidies. That would simply be self-defeating. As long as the whole world shipbuilding market is dominated by subsidies, that will encourage over-capacity and drive down prices still further. The combination of depressed world markets and fierce competition has brought the corporation acute difficulties. I know that further redundancies within the industry will have a severe effect on regions in which unemployment is already very high. As I have said, Sir Robert called on me this morning to discuss the corporation's most recent assessment of its prospects. It is no secret, and I do not conceal from the House, that his assessment is that the prospects are grim. Obviously, the Government agree with that.

British Shipbuilders reported in December that its losses for the first half of 1982–83 were £28 million. Sir Robert has warned me that losses for the second half of the year will be very much worse.

Against this background, I told Sir Robert that the Government recognise the difficult market situation that British Shipbuilders faces. I told him that we would give his ideas—he has put some specific ideas to me—on help for the industry the most careful and sympathetic consideration. Of course, British Shipbuilders already receives substantial support. Any further support has to be or might be at the expense of other deserving industries. All money comes from taxpayers and other industries. It would certainly not be in our interest to trigger off a subsidy race among the shipbuilding nations. I can assure the House that, in considering Sir Robert's proposals, we shall bear clearly in mind both our commitment to the industry and the importance we attach to a viable United Kingdom shipbuilding industry with a long-term future.

The Government have made massive support available to the shipbuilding industry. The scale of the support that we have provided is not acknowledged by Opposition Members. An estimate of the cost of support for jobs in the merchant shipbuilding division alone is that in recent years it has amounted to £7,000 to £8,000 per job per year. That is a generous level of support and goes way beyond that given to many other industries.

As I have made clear to the House before, this represents a continuing commitment. We accept that merchant shipbuilding will need some support for the foreseeable future. We have provided levels of capital expenditure very much higher—four times higher—than the level prevailing when we came to office. Investment under the previous Government was scarcely enough to meet the necessary requirements for health and safety and vital maintenance. This year we have approved £90 million of capital expenditure. This also compares favourably with the levels of investment in the Japanese industry—around £1,400 per man is going into British Shipbuilders compared with £800 to £900 per man in Japan. That is not mere replacement investment but includes, as the right hon. Gentleman acknowledged, investment in computer-aided design facilities. It also includes the development at Barrow of facilities to build nuclear submarines which, at about £200 million, will be the largest single investment ever undertaken by the corporation.

While British Shipbuilders has been operating in difficult markets, Opposition Members should acknowledge, as the corporation and Sir Robert have acknowledged, that it still has some way to go to improve productivity. Of course there have been improvements — real improvements — in the past two years but productivity has still not yet reached pre-nationalisation levels. British Shipbuilders estimates far eastern productivity to be two to two and a half times greater than its own. I recognise that it is difficult for British Shipbuilders to make progress in the present circumstances. We have acted to meet British Shipbuilders' particular needs this year. We have increased the EFL from £122 million to £160 million. The Government do not have an inflexible approach. We recognise the seriousness of the situation and we are prepared to respond to it, but we cannot simply go down the road of an unlimited subsidy race.

Despite the large sums of money going into shipbuilding, the severity of the current recession has prompted calls from Opposition Members for more help for the shipbuilding industry. It is alleged that we are not providing as much support as other nations do. It is extremely difficult to measure one country's aid against another, but I have observed that people sometimes overstate other countries' support and understate our own. In some countries—for example, Belgium and Denmark —it is true that shipbuilding credit schemes are more favourable than in Britain but their credit, unlike ours, is in principle available for purchases in any EC country and not just home yards. We take the view that it may be possible to improve credit arrangements for the British shipbuilding industry.

Ideas have been and are being put forward for improving the package available to British shipowners. I would not wish to rule out the possibility of extra help in that direction. One idea is that, like the Danish example, to which I have already referred, we might have more generous credit terms for purchase, provided that it was restricted to purchase in EC yards and not just home yards. If it could be demonstrated that that would result in more orders from British owners being placed in British yards, it might be worth considering.

I have discussed a number of ideas with the General Council of British Shipping. In those discussions, shipowners made clear to me the value that they attach to retaining the maximum freedom to order new ships on commercially advantageous terms. I stress that we are open to suggestions that can reconcile the interests of shipping and shipbuilding. We would welcome ideas that would serve the interests of both.

Mr. Orme

The Minister has informed the House that he met Sir Robert Atkinsom this morning and, as he is aware, my hon. Friend the Member for Whitehaven (Dr. Cunningham) and I also met him. Sir Robert did not go into the details of what he put forward to the Government. The Government have a responsibility to tell the House what the proposals are and whether the Government are prepared to accept them.

Mr. Lamont

I do not want to go into details, for two reasons. First, Sir Robert put forward a series of options that we wish to consider and, secondly, as the right hon. Gentleman knows, our aid for shipbuilding operates within an international framework and has to be approved by the EC. We wish to consider the options that have been put forward.

The Government are prepared to consider ideas that would serve the needs both of shipping and shipbuilding but we must pay proper attention to the needs of the shipping industry as well. The shipping industry is large and vital and employs 71,000 seagoing staff compared to the 18,000 people employed by merchant shipbuilding. Shipping has contributed more than £700 million to the balance of payments. It is an extremely important British industry and we must be careful not to damage one important industry in our attempts to help another.

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

Has the General Council of British Shipping advocated the idea of a scrap and build programme, or does it argue that the fleet is so modern that such an idea is irrelevant?

Mr. Lamont

I speak from memory but I do not think that it has supported the idea of scrap and build. It has put forward several ideas, in particular for capital allowances, which have been its main concern. I do not think that the General Council of British Shipping has supported the idea of scrap and build.

I should like to refer to scrap and build and to the question raised by the right hon. Gentleman about United Kingdom fleet orders. The right hon. Gentleman referred to the proportion of orders placed by the British fleet in British yards compared with what pertains in other parts of Europe. It must be remembered that the United Kingdom fleet is the second largest in the Community. It is three times as large as that of Germany, twice as large as those of France and Italy and four times as large as that of the Netherlands. The right hon. Gentleman does not compare like with like because our fleet is so much larger in relation both to our total economy and to our shipbuilding industry.

In 1982, our industry received orders amounting to 231,000 gross registered tonnage from the home industry. The relative size of our merchant fleet compared with the fleets of other countries is also a measure of how much more important shipping is to our economy than it is to other EC economies. For that reason, we have a good deal more to lose than they would have if we were to interfere with the legitimate commercial wishes of our shipowners.

Mr. Donald Stewart (Western Isles)

How can the Minister make that confident assertion about the size of the merchant fleet, when it has shrunk 50 per cent. in the last six years?

Mr. Lamont

It has shrunk, but my confident assertion is based on fact.

The right hon. Member for Greenock and Port Glasgow (Dr. Mabon) asked about scrap and build. It is an idea which he has supported, but we remain sceptical about scrap and build as a means of helping either shipbuilding or shipping. The case usually advanced is that it would help to remove surplus capacity and at the same time create new work for shipbuilding. At present there is a great deal of scrapping going on worldwide in the industry. If scrap and build were to be of any use, it must be demonstrated that shipowners would not be paid for scrapping vessels that would have been scrapped anyway.

As for scrap and build encouraging the construction of new vessels, we might end up simply worsening the existing surplus capacity in shipping and prolonging the adjustment process to which we must face up. It is not even clear that scrap and build would help to modernise the United Kingdom industry, as 70 per cent. of the dry cargo fleet in the United Kingdom is under 10 years old, compared with only 54 per cent. for the world fleet as a whole.

We must also take account of the effect that any scrap and build policy might have on scrap prices. If the effect were simply to depress scrap prices, we might, paradoxically, find that the intended effect of the policy was actually the opposite and that by driving down scrap prices, we were creating a disincentive rather than an incentive for scrapping older ships. Therefore, we remain sceptical, and that position is taken by our EC partners; this matter was discussed with them at the EC council.

There is deep disappointment and regret that British yards have been unable to do the refit of the Cunard Countess in time for the ship to sail on time and meet her commitments. However, there are certain facts to which I must draw the attention of hon. Members. First, the Countess was built in Denmark, not in Britain; it operates exclusively in the Caribbean; its home is in Puerto Rico; and it has never been to the United Kingdom.

Secondly, in respect of the commercial refitting of the Countess—that represents the bulk of the work to be done—the Government have no power, regardless of their views, to direct Cunard to have the work carried out in the United Kingdom. The suggestion that somehow the Government have an option to order Cunard to have the refitting done in the United Kingdom, and for the Government to pay any necessary compensation to Cunard, just does not exist; the Government have no such power.

Much has been said about obligations. The Government believe that they should live up to their obligations. The Government initially undertook to return the ship by 7 May 1983 but Cunard was persuaded to accept an extension to 9 July, when it must meet its obligations to passengers who have booked with the company. The Government therefore accepted an obligation to return the ship by 9 July and were determined to fulfill that obligation.

There would have been no problem if the refitting work could have been done in that time by United Kingdom yards. Cunard for that reason had discussions with three yards to try to do just that. What concerned Cunard above all was to get the ship back on time, and it was that which none of the yards could offer. To meet its obligations, Cunard reluctantly had to look elsewhere.

It has been suggested that the Government could perhaps have insisted that at least the MOD element of the refit could have been carried out in the United Kingdom. But that could not have been done in time for Cunard to meet its commitments to its customers. The last thing Cunard wanted was to invoke penalty clauses. The company did not want compensation. It wanted its ship. It has commercial commitments to meet — customers with bookings—and the ship was needed to meet them.

The right hon. Member for Salford, West seems to dismiss that as just a minor detail—too bad if Cunard does not have its ship—but what would his answer be to those who work on the ship who might find themselves with no work, those who might lose their jobs in the future because of the loss of goodwill? What would the right hon. Gentleman tell those people? Once does not eradicate lack of competitiveness in one company by creating it in another.

Mr. Orme

Perhaps the Minister will say what British Shipbuilders thinks about the job going to Malta and whether British Shipbuilders believes it can be done within the timescale. It does not believe it can be done.

Mr. Lamont

British Shipbuilders did not wish to pay the penalty clauses and did not think it was a good commercial risk for it to run. For both British Shipbuilders and the Government together to have incurred the extra costs—the penalty clauses if the work was late and the other penalties which would have been incurred for the late delivery back of the ship—might have doubled the cost of the contract.

It is all very well for the Opposition to jump up and down whenever an order goes overseas, but there is an important question here which I should like the right hon. Gentleman to answer. In the unlikely event of a future Labour Government, is he prepared to give an assurance that if any British shipyard or British company cannot match the price or delivery date of its overseas competitors, that Administration will always step in and subsidise the lack of competitiveness? If so, will he then explain what incentive there is for British firms to be competitive?

The right hon. Gentleman also referred to public sector orders. As he knows, the Government have a public sector purchasing policy. It is not a crude "Buy British" policy, but a policy which asks that the nationalised industries, the public sector, should use their purchasing power constructively for the advantage of British industry and should be mindful of the consequences of their purchasing decisions. Overwhelmingly the public sector buys British and places its orders for ships in British yards. At present, there are two Sealink ferries and a dredger for the Mersey docks being completed; a ship for Cable and Wireless worth £18 million; a research ship for the Natural Environment Research Council; and an accommodation rig for the BGC Morecambe field worth about £20 million.

The Government recognise that we must use public sector purchasing power in a constructive way to help our shipbuilding industry to become competitive. We recognise that the industry is in a state of crisis, along with the rest of western Europe. This is not a crisis which has suddenly arisen, nor one confined to the United Kingdom. The Government have supported, are supporting and will continue to support British Shipbuilders. We have already put some £600 million into the industry. As I said, investment is running at four times the level it was under our predecessors.

The right hon. Gentleman put forward some ideas as alternative policies, but in my view they are dead-end policies. Any hope that nationalisation could shield the industry from the worldwide crisis has proved hollow, as we on these Benches always knew it would. The industry may be nationalised, but it must still operate in world markets. I read that the Labour party is now proposing that there should be a nationalised shipping organisation, a captive customer for a nationalised shipbuilding industry.

Labour Members will be in danger of wrecking an industry that is a major employer and a major contributor to Britain's balance of payments. Their only answer seems to be unlimited subsidies—at least, they seem unlimited because they are unquantified. The idea that salvation for British shipbuilding can lie in some form or other of the famous, or infamous, Polish contract is madness. The total cost to the taxpayer of the Polish contract was more than £72 million— a disaster for the taxpayer and for the shipping industry because we subsidised ships in our yards to compete with British ships sailing the world.

We recognise and acknowledge the industry's problems. We shall continue to help, and we are determined to get the industry on a secure commercial footing which will offer the best prospects for the industry and those who work in it. I urge my right hon. and hon. Friends to reject the Opposition's motion and to support the Government's amendment.

Mr. Deputy Speaker

Before I call the next speaker, I remind the House that in the two hours that remain many right hon. and hon. Members wish to take part in the debate. Therefore, I ask for brief contributions, please.

8 pm

Mr. Frederick Willey (Sunderland, North)

I am anxious to speak, for two reasons. First, we had a deputation from Tyne and Wear this afternoon. Many friends of mine were there. Secondly, I have made representations with deputations from the Sunderland War for Work board. This is important. This is not only an industrial problem; it is a social problem. We in Sunderland are now in the position that we were in in the early 1930s. We are having successive waves of redundancies in a town that already has one in four of its men unemployed. There are wards—I could call them the shipyard wards—in my constituency with 40 to 50 per cent. unemployed. Unemployment will soon become unbearable. Something must be done. I can say the same about the national problem. If we consider the figures for British shipping as well as those for British shipbuilding we see their crucial importance to Britain. If we are not careful we shall lose our independence and security.

Following a recent deputation to the chairman of British Shipbuilders I raised four matters with the Secretary of State. The first point that we raised was that, as the cable ship is being built in Korea and not in Sunderland Shipbuilders—no one will deny that that was a muddle — we should have a formulation of procedures for placing such orders abroad. We have heard the Minister's comments on that but the Secretary of State was a little more direct. He said that we cannot compel the public sector to buy British. That will not do. If he wants to tell anybody he should tell the Prime Minister; he should not tell me.

We have had an account of the matters relating to the Cunard Countess. I cannot deal with all the details but if we compare Britain with our competitors—the Japanese and Europe — we know that we are in a pathetic position. We need more competent people who can devise matters to ensure that we hold the work in Britain.

Secondly, we asked for action on Korean prices. The Secretary of State's reply was that the OECD has an initiative to open a dialogue with Korea and he said that he will maintain a firm and positive approach. Again, I am afraid that is not good enough. Britain improved its selling prices and in 1981–82 it nearly attained viability. But then there was the further recession and a 30 per cent. fall in orders, when orders fell as low as they were in 1978.

What do we do? We must look at the far east. It is no good regarding the far east as unimportant any longer. Japan has more than half of the present production and Korea has 10 per cent. four times as much as we have. Sunderland once had a shipyard that could always outdo the Japanese in skill and ability but it has gone. It had that ability because of good management. It was an old yard. It had exceptional difficulties but it had good management. When we compare ourselves with the far east we must recognise, as the Minister did, that it reduced prices by 30 per cent. With 60 per cent. of the market, it had every reason to hold it. That is what it did. Japan is now retaliating against the Koreans. It is saying that it will extend automation to push out the Koreans.

The Secretary of State's reply will not do. We must be tough. Not only Britain but all Europe must be tough. We must tell the Koreans that we shall boycott them because they artificially increased the capacity of world shipbuilding at a time when it was already in difficulties and they are selling ships at artificial prices to hold the market. We must tell them—and the Europeans—that we shall not tolerate that. It is about time that we were bold enough to take such action.

The third matter that we raised was the need for immediate temporary inducements to United Kingdom shipowners to place orders in British yards. The Secretary of State, the Minister, called our attention to credit guarantee and the intervention fund. But he went on to say, rather bluntly, that he did not really see the scope for providing yet more incentives. Like the Minister, I appreciate what has been done, but, again, that reply will not do because of the special difficulties that we are in. We are dealing with the survival of the shipbuilding industry —certainly that of merchant shipbuilding. If the Minster wishes to call in aid Lloyd's, I agree with Lloyd's. It has said that the outlook is gloomy and will continue so for a further one and a half to two years — about the same forecast as the Minister of State gave.

We feel particularly strongly in Sunderland because we have lost work to Harland and Wolff. We are sorry that Harland and Wolff has lost a further 700 jobs, but Sunderland lost a domestic order that it had always had, for political reasons. When Mr. Parker went to Harland and Wolff he was able to satisfy the Government that his claim to that work should be recognised.

What do we do? We shall discuss the depreciation allowances in the Finance Bill. I agree that there will be difficulty with the industry and the EC. I suggest, as I have suggested before, particularly in view of the Falklands experience, that it would be simple and easy to build for stock. We could set up an agency to organise that and allow it, if it wishes, to lease the shipping. That would be a limited proposition. Therefore, one would have no more in mind than providing for 18 months to two years, and having the disposal of the ships determined by the return of normality to shipping.

The fourth point that we raised was that provision should be made in the industry for job security. We did so because the chairman of British Shipbuilders said that jobs should be put before wages. It was not for us to deal with such matters, but for management and employees. If we are going to deal with wages in an industry that has dropped from third to 19th place in the league table in a short time, and if two major yards are to be mothballed, we must do something to achieve stability in the industry. That is why we have put forward that possibility. Mothballing is just another term for closures.

The time that we are dealing with is 12 to 18 months. This is a complex and difficult matter, but all that the Secretary of State said was that secure jobs are to be found only in fully competitive firms. I expected a better response. The unions and management are discussing the matter now. I should have thought that we should try to find an alternative to redundancy, which erodes the industry. The Secretary of State is a nice chap, but if that is the way in which he approaches four of the problems affecting shipbuilding, it is time that he gave up. We want someone who is much more practical and able to deal with the problems.

There is only one solution to the present difficulties in shipbuilding. There is only one lifeline. It is orders and nothing else. We must get the orders. We can do what we like, but if we do not have the orders, we cannot restore the yards to stability. Some yards will be entirely out of work within a few months. I can refer only to our yards. I am sure that my hon. Friend the Member for Sunderland, South (Mr. Bagier) will agree with me. There is an Ethiopian order for a couple of ships. This is an illustration of the difficulties. My hon. Friend and I met the Minister for Trade months ago, and he approved the contract, but it has taken a long time to get it through.

We need the Mexican orders. There have been renegotiations over a couple of ships. There are difficulties about guarantees, but they must be met. I intervened in a debate in which my hon. Friend the Member for Jarrow (Mr. Dixon) spoke just before the recess. The Under-Secretary of State for Industry tells me that he hopes that there will be a successful conclusion. I am hoping for that too. If the Under-Secretary of State can be so hopeful, we have every reason to be hopeful.

There are also Swedish orders for a couple of oil-drilling support ships. I do not know whether the information is right, but I am told that we have a good chance of getting those orders and that we virtually have them. There are also Indian orders for oil rig ships. A while ago the Minister for Overseas Development told us that it was likely that Sunderland would get some of the work. I should like to know how likely that still is.

There is also a possibility of orders from Bangladesh and, less possibly, orders from Burma. That is a good report. I am depressed about shipbuilding, particularly in Sunderland, but I believe that the problem can be solved. If one could solve the problem in Sunderland, one could probably solve it in the rest of the shipbuilding industry. We should get some of those orders. If it is necessary, we should make up by building for stock. That can be done. The issue is one of survival. However, we can say that there is real hope. I hope that before long the Government will take courage and see that we get those orders and that, if necessary, there is building for stock.

8.15 pm

Sir David Price (Eastleigh)

I am conscious of your injunction, Mr. Deputy Speaker, to be brief. Many hon. Members wish to take part in the debate so, if the House will forgive me, I shall address myself to a few points at a gallop.

I am sure that the House will agree with the right hon. Member for Sunderland, North (Mr. Willey) that the basic need is for more orders. We can leave all the history for our lectures on other occasions. I have brilliant notes here, but I shall forbear from developing them to the House. I think that the House will also agree with me that there are basically two broad markets for ships. The first is the military market and the second is the civilian one. The House will further agree that the Government have a good deal more power and influence over the former than the latter. That is common ground between us all.

The Royal Navy is overwhelmingly the principal customer for our naval ships. Although four good orders were announced before Christmas for new fighting ships, they are not sufficient to fill our naval shipbuilding yards. I have a special interest in the fortunes of the Vosper Thornycroft yard. It is tempting for me to dilate on the great merits of that yard, but in the interests of brevity I shall not develop the reasons why I think it is an extremely good yard. I shall assume the assent of the House that Vosper Thornycroft is an extremely good yard.

My next question may be relevant to the questions of other hon. Members who wish to intervene in the debate. What has happened to the Carrington statement, as it is known in the industry, of 23 July 1973, in which this was said: I have, therefore, decided that in order to preserve this special capacity in the three firms which have built it up in recent years, Messrs. Vickers, Yarrow and Vosper Thornycroft, we must concentrate future warship orders for the Royal Navy increasingly on these firms. This will mean that the scope for placing competitive contracts for warships will be considerably reduced; however, the three firms have promised their full cooperation in ensuring that we continue to receive full value for money."—[Official Report, 23 July 1973; Vol. 860, c. 306.] That broad policy injunction has never been rescinded. I should like the Minister to confirm that that is so when he winds up. Why were two orders for frigates placed with Swan Hunter before Christmas? I do not object to the orders going to Swan Hunter from the point of view of regional employment but that order makes nonsense of the Carrington policy.

What is the position within British Shipbuilders? It has a coherent warship division which, if it is to remain a coherent division, should tender for the division as a whole and get sales for it; but the present policy of the Ministry of Defence is to ask each individual yard to tender. I am not clear about that. There seems to be a conflict between a centralised model for British Shipbuilders — the parameters are well known to the House—and a highly decentralised model, with each yard being its own profit centre and having control of most of its profits and investments. British Shipbuilders seems to be falling between these two stools. I should be grateful if the Minister would explain these arrangements because it is of great interest to the House, particularly those of us who have warship builders in or near our constituencies.

Merchant shipping prospects rest with the home side and the overseas side. With regard to the former, I hope that the House accepts that a depressed British Merchant Navy cannot order many ships from anyone. I remind the House that our Merchant Navy has halved between 1975 and the beginning of this year. The House is familiar with the figures so I shall not detain it by quoting them unless I am challenged to do so. That halving is part of the general recession in world shipping.

It is not, therefore, surprising that we learn from the General Council of British Shipping that in 1982, the British merchant shipping industry ordered only 318,000 deadweight tonnes worldwide—that is the equivalent of one ultra large crude carrier—and 75 per cent. of those orders were placed in United Kingdom yards. The scale is so small, however, that it has not made a great contribution to the shipbuilding industry. Indeed, by comparison, United Kingdom owners ordered 10 million deadweight tonnes worldwide in 1973. That is 30 times as much as last year. The House must face up to that. As long as our Merchant Navy is depressed—although we are not debating the Merchant Navy we must refer to the depression in merchant shipping — it is not able, no matter how much it wants to, to modernise and to place new orders.

The General Council of British Shipping supported by British Shipbuilders has asked for major tax concessions. The right hon. Member for Salford, West (Mr. Orme) mentioned that. No doubt we will have an opportunity during the later stages of the Finance Bill to discuss it in detail. Today, my hon. Friend the Minister advanced other possibilities. I shall be interested to hear them developed further and the reaction from British shipowners. Unless something is done, the Merchant Navy will slowly float away. It is as simple as that. That brings me to the export possibilities of British Shipbuilders.

Every hon. Member 'who has spoken in our recent debates recognises that fair competition barely exists in the world. No doubt the figures that the Government have quoted in answer to parliamentary questions and in evidence to the Select Committee are accurate in so far as they deal with the official statistics. However, many of us are aware of what happens in practice. If a yard in another country really wants to win an order, it goes out and gets it irrespective of the price.

I have examples, with which I shall not weary the House, when par for the course has been taken as the Japanese price and other countries, especially Korea., say that whatever the Japanese offer they will come in below it, irrespective of the consequences on their profits. That is the reality of what is happening. It offends all the rules of the OECD, the EC and the rest, but that is what is happening and it must be recognised. In support of that argument, I shall quote a statement by British Shipbuilders when, in relation to its marketing effort around the world, it said: Our marketing people are scouring the world looking for orders, but it is difficult when some yards put in ridiculous bids just to keep their workforces together. Some Far Eastern yards are quoting prices that will not even pay for the cost of materials. When my hon. Friend attends talks in the EC, I hope that he and representatives of other EC countries will consider whether to treat such bids as dumping. We have recognised legislation on the subject. I shall not go through it all but, as a Minister, I had to administer that form of legislation. It is difficult to get full proof of dumping but in this case dumping is apparent.

Sir Kenneth Lewis (Rutland and Stamford)

My hon. Friend said that he was a Minister with responsibility for these matters some time ago.

Sir David Price

A long time ago.

Sir Kenneth Lewis

In the past year or two there have been obvious cases of dumping in a wide range of industries, including, most obviously, the shipbuilding industry and the Korean orders. From time to time, we have asked about action being taken with the relevant Department under the dumping rule but it has never been followed through. Will my hon. Friend tell me why, and when something will be done? Unless we deal with the problem, other countries will continues to undercut us. They are dumping.

Sir David Price

I am most grateful for My hon. Friend's support. I have no Front Bench responsibility, so he should address himself to someone else. The difficulty has always been getting full proof of dumping. However, I believe that we are in a stronger position to do something about dumping if we act with Europe rather than individually as the United Kingdom. I was interested in some of what my hon. Friend the Minister said about European credit schemes. It is no use having credit schemes unless we keep out that which is demonstrably unfair.

The role of the Merchant Navy in our defence strategy brings together the needs of the Royal Navy with those of the Merchant Navy. I need not develop what I believe is a proven lesson of the Falklands campaign, which raises no controversy in any part of the House—that the Royal Navy needs the Merchant Navy. I shall leave it at that. The House will agree that we should have an appropriate partnership between the Government and the shipping industry because without it, there can be no guarantee that we shall have an adequate Merchant Navy when it is next needed for the defence of the realm. I suggest that there is an early market for new orders for British shipping in this area of shipping.

More orders are urgently needed now both for warship and merchant yards. Although the Government cannot guarantee sufficient new orders, they have an influential role to play. It is much more influential on the military than on the merchant side, but it is still influential on the latter. My hon. Friend the Minister acknowledged that today. I earnestly hope that his and the Government's influence will be successful.

8.27 pm

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

The Minister's speech was uncritical of the industry. I welcome that because, if any industry needs sustenance from the Government, it is the shipbuilding, ship repairing and marine engineering industry. In the classic sense, the Government could abandon the industry to the vagaries of the free enterprise system, whereupon it would disappear altogether. I gather, however, from what the Minister said, that that is not the Government's policy. Irrespective of whether the Government fulfil their policy, at least on record, I am taking it that the Government wish to have a positive shipbuilding, ship repairing and marine engineering presence in the United Kingdom. Therefore, what the chairman of British Shipbuilders, Sir Robert Atkinson, said to the Minister today is important. His propositions will undoubtedly be considered by the Government and processed in time. The hon. Member for Eastleigh (Sir D. Price) referred to two divisions, but I believe that there are three.

This Government, like any other, must have their own naval requirements. In my constituency 800 men are working at Scott Lithgow, not on submarine building and refits as they have been since the beginning of the century, but on other work. If they do not get more submarine work, they will be unemployed by Christmas or by next spring. If they are fortunate enough to obtain employment elsewhere, it will be difficult to reassemble the team, with the result that the Navy will have only one yard at Devonport to carry out such work. Submarines may be built at Vickers, but in Scotland not at all.

The Government should consider the defence programme to see whether they could speed up the shipbuilding that is to be done. Originally we were promised six refits of the Oberon class submarine at Scott Lithgow in Greenock and Port Glasgow. The yard completed two. The other orders were taken away from the yard, not because it was inadequate, delivered late or produced bad work—it got full marks and praise for its work—but because the work was needed elsewhere in the United Kingdom, and so it went to Devonport. Unless one of the four remaining orders is restored, the gap between that work and the building of new submarines will mean that the team is lost.

The first of the SSK2240 submarines will be built at Vickers, and we do not quarrel with that. The order should be placed in July, and we hope that it is not delayed, but we wish the second order to be brought forward from July 1984 to perhaps Christmas, rather than waiting until the first submarine is built. In that way, we can retain the alternative of being able to build submarines in one of two yards. The hon. Member for Eastleigh also made that point. Let us have no arguments about free enterprise, because all Governments have conspired to destroy honest competition. We must all survive as best we can. I do not believe that we can cushion everyone and permit workers to disregard productivity. That is nonsense. They must do as well as they can, but genuine free enterprise no longer exists. The Government must create orders if they wish to retain the industry because there is no business outside the Government, given the present recession and the fact that it will last for some time.

That is an illustration from a yard in my constituency, which I am sure is repeated at Yarrow, further up the Clyde, on Tyne and Wear, in Southampton and elsewhere in Britain. The Royal Navy, through the Government, should be advised to speed up orders for ships that we shall require anyway. I am sure that it would be willing to do so. We may be wrong, and the world recession may disappear. There may be a recovery within a few years, or even one year, in which case we shall have managed to keep the industry going by promoting the orders. We could then slow down naval development to attune ourselves to the new demands. However, I do not expect that to happen.

Mr. Mike Thomas

Has my right hon. Friend's constituency, like mine, been declared by one of his authorities a so-called nuclear-free zone? Does he agree that it is the greatest hypocrisy to lobby for shipyard orders, and to ask Ministers to place naval orders at yards such as Swan Hunter on north Tyneside, while at the same time promoting the idea that the area should be a nuclear-free zone? Is not that the looniest part of the Labour party's policy?

Dr. Mabon

Of course, but I am trying to be uncontroversial. The Government might last another year, which will be a vital year for Birkenhead, Merseyside, Clydeside and Tyneside. It is vital that the Government do something. It is in no one's interest to prejudice the Government against the shipbuilding industry. We must persuade them to help shipbuilding to survive. The idea of a Labour campaign to embarrass the Tories at the expense of shipbuilding is one of the most cynical exercises that could be carried out. We are supposed to be having an all-party debate to persuade the Tories, and anybody else, of the right things to do to save British shipbuilding in the next year or two. I suspect that there are other motives. I am interested in the jobs of my people and not in the cheap votes that are sought in this contradictory way.

I despise those politicians who are prepared to put their party before the interests of the industry. The industry is concerned with survival. I am speaking for my people as well as for myself in saying this. My people resent deeply what is being said in this context. We wish to persuade this Government, the next Government or whatever of our case and are concerned about the promotion of defence orders.

Let me take this one stage further. The civil contacts in merchant shipping that were referred to are seriously at risk because there is little demand for merchant shipping. British Shipbuilders developed a special advanced drill ship called the BS8000. It has not yet been built but, after all, many of the first-class vessels in the oil industry were designed when there were no customers. In Clydebank, to keep UIE going—it is a good company now—we had to advance the promotion of orders for drill ships. As a Minister I did this three times and previous Ministers had agreed to the speculative building of drill ships. Admittedly, the ships were not a substantial order, being about £7 million or £10 million, but that is quite a speculation because of the number of jobs involved. Every one of the ships was sold at a profit.

The BS8000 is 10 times the size of the drill ships built in Clydebank. It could be built by Cammell Laird and possibly better built by Scott Lithgow, but certainly should be built in the offshore division of British Shipbuilders. However, it does not have a customer. The chairman of British Shipbuilders should, in the package of proposals for aid that he suggested to the Minister, have included the speculative building of the giant oil rig, to be bought by someone. Many of the oil fields mentioned by the Minister of State, Department of Energy which are coming under the new provisions in the budget, such as the marginal fields, could buy as many as six or eight ships a year. The big customer at the moment is Sun Oil—we all know that. Perhaps it will be interested, or the rig might be bought overseas.

The Government have to give not money but a guarantee to British Shipbuilders that if it builds the rigs they will guarantee the money. If British Shipbuilders sells the rigs, no public money would be involved. What is more, of the £100 million or the £80 million that I have mentioned as the price of the rig, about £20 million or £30 million represents the cost of the customer's internal machinery—computer systems and so on. That is in the deal, but it is not part of the guaranteed price. Therefore, the sum is not quite so formidable.

I advocate advancement not only of defence orders for all yards, but of the oil orders, for which Cammell Laird and Scott Lithgow are the leading yards. I agree with the hon. Member for Eastleigh that merchant shipping is different. My intervention to the Minister about the Chamber of Shipping convinces me that there is very little case for saying that the highly modernised British fleet can scrap and build. We have had this reply for many years. There was a time at the end of the war, and up to about 10 years after it, when the British fleet was very old and the scrap and build programme was a sensible one to achieve.

There is yet another aspect of this, however, in relation to merchant shipping, which is to say to British shipowners, "Do you not realise that without a British capacity for building ships you will in the last resort have to face up to a highly expensive market?" Some might say that the Third world countries are bound to develop to such a degree that they will always cut each other's throats. Korea will be the Britain of tomorrow, or the Japan of tomorrow, in relation to how Japan has been knocked out of the shipbuilding business.

I believe that British shipbuilders should be encouraged, not necessarily by fiscal means but by persuasion—as the Italians, the French and the Germans are able to do. I do not believe that the reason why these countries see their ships built in their own yards is exclusively fiscal. I believe that it is because there is a feeling that they should be built in their own country. This is particularly the case with the French. I confess that there may be something in the Italian system that I have misunderstood, but the figures are overwhelming and I cannot believe that British shipowners are so unpatriotic that they will not come back to their own country.

I will concede that the criticism of British shipowners about the relationships and practice in our yards and about low productivity might have had some substance. but they really must wake up. Times have changed. The industry is facing a precipice; the industry is facing extinction. The shipowners must realise that the industry wants to prove itself in merchant shipbuilding as well as in the other areas. In these areas the Government can do a great deal in defence. That is not the Minister's prerogative, but he has to argue it with his colleagues. They can do a great deal in oil. That is perhaps not his immediate prerogative, but he has to argue that with his colleagues. In merchant shipping it is perhaps more difficult, but I would urge him very seriously to look at what Sir Robert has advanced to him today, to try very hard to see whether he can meet that and, if he really believes that British shipbuilding can survive, as it must, to give the help now—not next year or the year after.

8.42 pm

Mr. Tony Speller (Devon, North)

Were we speaking about sheep, I imagine that the benches on this side would be fuller, and I suspect that we would be happier. It is strange that if we are talking about agriculture we are talking about prosperity within the Economic Community, but as we are speaking about shipbuilding we are talking about a deep depression.

I wish to speak briefly this evening about a shipyard that sounds like a farm. It is called Appledore, which would make a lovely name for a farm, but it is a very small super shipyard and a very efficient one, without the restrictive practices which may hinder other shipyards. Like other shipyards, however, it faces the prospect of losing some 25 per cent. of its work force.

It is strange that were this a farm—a large farm but none the less in the agricultural world—someone would be talking about some form of Community intervention more effective than we have at present. Someone would be talking about moving out of milk and into meat. Someone would be saying, 'With the skills you have, we will pay you to leave this sector of this industry, which is steelworking basically, and move to some other sector which is also steelworking but different."

It may sound ludicrous, but adjacent to Appledore there is soon to be built a very large bridge costing millions of pounds, and it may well be that working in steel is working in steel whether it is vessels or sections of a bridge that are being made. I make no apology for using the agricultural analogy, but there is all the difference in the world between the two debates—this one and the last one in which I participated, when we were talking not about ships but about sheep.

I suppose that, if the world recession in shipping ends in one year, two years or three years, the odds are that there will still be highly efficient shipyards outside this country. I wonder how many will be left in this country. It seems likely to me that we are on starvation rations all round, which will result in genuine economic malnutrition by the time orders once again start to come our way. This Government must consider whether it is not better to spend a lot of money to encourage some people right out of an industry where quite clearly there will never be the demand—as my hon. Friend the Member for Eastleigh (Sir D. Price) said a little while ago—that there was in 1972.

If that is the case, let us not beat about the bush. Let us consider the three fascinating points made by the right hon. Member for Greenock and Port Glasgow (Dr. Mabon). I shall steer clear of his more controversial comments.

The right hon. Gentleman said that orders were sent elsewhere for the wrong reasons. If that means that British Shipbuilders has the right or even feels an obligation to juggle orders to pass the rations around irrespective of efficiency, that is entirely contrary to Conservative policy and economic sense in the future of our shipyards.

Secondly, the right hon. Gentleman said that there was no free enterprise left. If that is so, it is wicked that smaller shipyards such as Appledore imagine that they are competing freely against the others. On agricultural matters and indeed on this issue, I have had no problems in meeting Ministers. In discussions about meat or sheep, there is also no problem in meeting the commercial interests involved. In this context, however, when my hon. Friend the Member for Devon, West (Sir P. Mills) and I sought to meet Sir Robert, he had left the country or was too busy elsewhere to see us. The shipbuilding industry sometimes seems to feel that it is remote from the rest of the economy — thoroughly depressed and, because of its remoteness, less happy and with less of a future.

Thirdly, the right hon. Gentleman referred to energy. The Budget should certainly bring a great improvement to the oil industry. Let us hope that it does and that we are just as pushy as other nations in ensuring that the vessels and rigs are built in our own yards. I see no harm in economic nationalism if economic co-operation within the Community is not working, as it clearly is not in this case.

Finally, I plead with the Government to support this small, efficient yard for which small orders—half a loaf at a time — are not exciting but are adequate nourishment. Mention has been made of Vosper Thornycroft as well as the yard in my area of Devon. It would be a shame if they were bled so that they had no strength left when the upturn came. I have great faith in the ability of British yards to produce good ships and I have great faith in the Government's ability to seek and to secure orders for all British vessels within our capacity. I do not share the view of the right hon. Member for Salford, West (Mr. Orme), who appeared to seek subsidy for everything, but I believe that there must be subsidy for some things. If we can subsidise farmers and so many other sectors through Community co-operation and see no ill in that, it is logical that we should also show interest in our shipbuilders. They are no less worthy of survival and no less hard-working, but they clearly feel that they are getting the dirty end of the stick, and I believe that they are right.

8.48 pm

Mr. Robert C. Brown (Newcastle upon Tyne, West)

I shall confine my remarks essentially to the Tyne and Wear area. The threat of redundancy faces workers in other parts of the country, too, but we have more shipyards than any other area. Including those employed by suppliers, some 80,000 people are directly or indirectly employed in shipbuilding, ship repair and marine engineering in the Tyne and Wear area. Despite the rundown that has taken place, British Shipbuilders is the second largest manufacturing employer in my native city. That represents more than 10 per cent. of the jobs in Newcastle.

I give those figures because last week the regional secretary of my union, the General, Municipal, Boilermakers and Allied Trades Union, received a reply to a letter that he had sent to the Prime Minister a week or two earlier. In that reply on behalf of the Treasury the Minister of State, whilst appreciating my union's concern about the problems of the shipbuilding industry, indicated clearly that the Government could see no future for the north-east being dependent on a traditional industry such as shipbuilding. I quote from his reply: The future must lie in widening the industrial base of the region and moving away from heavy dependence on traditional industries. I respect the Minister of State for his honesty in expressing his beliefs and those of the Government, but it must alarm everyone in the area, heavily dependent as it is on some aspect of the maritime industry, that the policy of the British Government should be unashamedly to sit back and allow the collapse of shipbuilding and ship repairing in the hope that at some point in the dim and distant future other jobs will appear to employ the vast army of unemployed men and women which would result from the demise of the shipbuilding industry.

I ask the Minister and right hon. Members on the Conservative side what the people should do in the intervening period until the dim, distant future becomes a reality. It is nonsense for a maritime nation to write off an entire industry whose importance to the nation is so obvious. Last year, according to Lloyd's register of shipping, less than 44 per cent. of the tonnage of ships for United Kingdom registered companies was under construction in this country while Korea was given orders to build 25 per cent. of our gross tonnage. In anybody's language that is a scandal.

In the letter to Tom Burlison of my union, the Minister claims that capital investment in the shipbuilding industry has increased under the Government. The Minister of State is trying to excuse his Government for the savage treatment that is being dealt out to this nationalised industry. I refer hon. Members to a more informative set of statistics which show that, as a percentage of total United Kingdom investment, capital investment in the United Kingdom shipbuilding industry after three years of the Conservative Government stood at only 1 per cent. compared with almost 10 per cent. during the 1970s.

Without a rational maritime policy based upon maintaining a credible shipbuilding and ship repairing facility, rather than the narrow anti short-sighted desire for profitability, shipbuilding and ship repairing will have little future. In condemning British shipbuilding, as the Government appear to do, they condemn numerous communities based round the rivers of the Tyne and Wear, where unemployment in some parts already stands at well over 20 per cent.

The rundown of shipbuilding also has an effect on other industries. According to British Shipbuilders' evidence to the Select Committee on Industry and Trade, 50 to 60 per cent. of the cost of a ship is made up of materials and equipment bought in from other companies, and 94 per cent. of those purchases, costing £550 million, are placed with United Kingdom-based companies. Of course, one of the main suppliers of the shipbuilding industry is the British Steel Corporation which supplies some 95 per cent. of the heavy plate requirements of British Shipbuilders. Therefore, if British Shipbuilders is thrown to the wolves, there will be a considerable knock-on effect for the steel industry.

There is no doubt that the Government lack a coherent industrial strategy. The devastation that has occurred already in towns around the north of England shows the ineptitude of the Conservative Government in managing British industry. I remind the Prime Minister that the industry is much more complicated than a grocer's corner shop. Interdependence means that if one substantial industry falls it will take several others down with it. Since the Government came to power they have blamed the decline in many industries on over-manning and industrial disputes. The men employed by British Shipbuilders were told two years ago that low productivity and too many strikes were the reasons for the loss of jobs in the industry. It was a transparent lie. With a 16 per cent. rise in productivity and an excellent industrial relations record, job losses continued to grow unimpeded. These men, who are justified in saying that they have increased their productivity magnificently, cry, "What must we do?"

This afternoon representatives of the workers in the yards on Tyne and Wear were in London to add weight to the campaign to save shipbuilding and ship repairing. It is a matter of survival for these men, their wives and their families. Tyne and Wear county council, which is helping to spearhead the campaign, has outlined an eight-point plan based upon investment in shipbuilding. It includes promotion of a genuine "Buy British" campaign, rather than simply paying lip service to the slogan, and draws attention to the need to channel funds and to diversify the industry, particularly with regard to offshore exploration.

8.56 pm

Mr. Barry Porter (Bebington and Ellesmere Port)

I am sure that the hon. Member for Newcastle upon Tyne, West (Mr. Brown) will forgive me if I do not follow him in his eloquent plea on behalf of his part of the country. I am from Birkenhead on Merseyside. I hope, Mr. Deputy Speaker, that you will find time for my Member of Parliament, the hon. Member for Birkenhead (Mr. Field), to catch your eye. He knows a great deal more about Cammell Laird's yard, its intricacies and details of the work force than I can ever hope to. Despite his presence, I still choose to live in Birkenhead.

I remember that the first launch that I saw there was the Ark Royal in about 1950, when the Queen Mother launched that enormous vessel. The latest launch I have seen was HMS Edinburgh, last week. Between those times, the work force of about 25,000 at Cammell Laird's has decreased to less than one-fifth of that number. I make that point, in a debate which has been notable for its nonpartisan views, to show that during that time, under Governments of both persuasions, employment in shipbuilding and ship repairing has drastically decreased. I concede immediately that the position has been exacerbated by the recession, which was so eloquently described by my hon. Friend the Minister. I do not believe that anyone could seriously say that Governments can create demand for ships when all the evidence that we have had over the past quarter of a century points to the contrary.

As well as the recession, there has been the increase in competition, about which we have heard in such detail from the right hon. Member for Greenock and Port Glasgow (Dr. Mabon). I am sorry that he is not here. One of my immediate next-door neighbours in the fifties was an engineer from Port Glasgow. I did not take much notice of him either.

While I was having my lunch after the launch of HMS Edinburgh on Thursday last, Sir Robert Atkinson said: The point of no return is with us. Some people might observe cynically, "He would, wouldn't he?" Sir Robert is about to retire and there is no virtue or percentage in his saying that if it were not the case. From what I have read in the past few days, and from my observations over the past few years, it seems that it is probably correct.

One Opposition Member said that what we needed was demand. I said initially that in my opinion it is not within the competence of the Government to create demand—certainly not for merchant ships—unless one decides to build for stock. However, the modern sophisticated ship cannot be built in that way. Clearly, one waits for demand in the case of merchant shipping. Of course warships have to be built, and demand for them can be and should be created. Perhaps I might make one plea before my hon. Friend—I use that term advisedly—gets in, and say that there is no better yard for building warships than Cammell Laird, although it could hardly be described as part of the offshore division.

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

Is it in a nuclear-free zone?

Mr. Porter

No, we are in an employment-free zone. That is what I am interested in. Is it not the job of Governments, whether this Government or any other, to look not so much at demand as at capacity in the long term and what it will require in terms of capital, labour and skill? It is for the Government to determine that capacity in conjunction with British Shipbuilders and industry generally, and with other parts of the Government machine. It was said that the British merchant marine was of great value to the balance of payments. The Government can and should make a judgment about the capacity that is required, and I hope that that economic advantage will be given to us.

I am not paid to give solutions. I am paid moderately to pose questions. Have the Government yet decided what capacity should be in warship building? Have they decided what capacity should be in the merchant marine? I was somewhat heartened to hear my hon. Friend the Minister say at the beginning of this debate that the Government were being flexible and were considering the package that had been presented by Sir Robert Atkinson, and I hope that that package contains British Shipbuilders' suggestions for the right capacities.

In the interest of brevity, and in the hope that I shall hear the words of my own Member of Parliament, I conclude by referring to the fact that my hon. Friend the Under-Secretary was recently dispatched to the west midlands to save the engineering industry there for the nation. I hope that he will find time in the other three arid a half days to consider the country's shipbuilding and ship repair industries.

9.2 pm

Mr. W. E. Garrett (Wallsend)

I have participated in many debates on the problems of the shipbuilding industry during the time that I have been Member of Parliament for the Wallsend constituency. By nature, I am an optimist, but I get a feeling—it is becoming widespread not only in my constituency but elsewhere — that something terminal is happening to the industry. Whether that is a myth or a reality, I do not know. However, the mood of pessimism which was displayed by a spasm of anger yesterday at Hebburn on Tyne when the BP tanker British Achievement was launched is just one spasm, and it is difficult to know whether that spasm is a continuation of apathy among those who are employed in and around the shipbuilding industry.

The Minister himself seemed gloomy and despondent. That, at least, was the feeling that I got from his speech. he did not appear to have the verve and vigour that he has displayed on other occasions when he has had to give a public explanation of the problems that affect the industry. If this policy of drift—and drift it is—continues, and if the package that is being discussed with British Shipbuilders and the Government—I understand that a rescue plan has been mooted—fails because of world market forces, we shall have to ask ourselves some questions. What happens to the yards that are mothballed? Are we courageous enough to say, "No, they are not mothballed but closed"? What is the point in kidding people that something is being mothballed when the reality is that they are to be closed permanently?

The hon. Member for Newcastle upon Tyne, East (Mr. Thomas) knows more about that than I do because in a neighbouring constituency a yard is equally affected. What will happen to the yards that are not being mothballed? Must the Government continue with investment to bring them up to a more efficient standard? A lot of money will have to be put into our yards to bring them up to that standard. If money is invested, will it be wasted? The House must have a statement from the Government of what investment decisions are to be made. Even if the labour force continues to be reduced, will there be investment to ensure that Britain has some hope of competing fairly in the world market?

The question of research must be examined. What is the good of having the British Ship Research Association with those fine brains and technical expertise? Is it to continue? If it is, where is the result of its research going? Such questions must exercise the minds not only of Ministers but of all hon. Members.

I have always been proud of the fact that when I started my apprenticeship before the 1939–45 war I was sufficiently keen—one had to be damned keen—to be offered an engineering craft apprenticeship. At that time, out of a population of 46 million, 2 million were unemployed. When I served my apprenticeship, I was taught the necessary skills. I could not get that out of a book or by attending evening classes. If the present generation of skilled workers disappears, the skills will also vanish. It is all very well for administrators and those who have degrees in the social sciences but there will not be plumbers, electricians, fitters, systems analysts or planners.

People in the shipbuilding industries are discussing these questions in the clubs with their wives, sons and daughters. A mood of despondency is creeping in. The Minister knows that money could be put in tomorrow and that more people could become redundant on a relative pittance of £5,000 or £6,000, which is less than one and a half year's salary at £60 a week. What are we to do? Ministers have not applied their minds to that question. The country is looking for a lead and for guidance. Above all, it is looking for reality, and it is not getting it.

9.8 pm

Mr. Frank Field (Birkenhead)

I wish to convey to the House the atmosphere in the shipyard in my constituency. It is one of pride and anger. The pride comes from the performance of the yard during the past few years. As my hon. Friend the Member for Bebington and Ellesmere Port (Mr. Porter)—I call him that on this issue because he lobbies as well as anybody else for orders for Cammell Laird—stated that last Thursday we were present at the launching of HMS Edinburgh. That ship, like the Liverpool, was a year ahead of schedule. The outfitting of Edinburgh on the day of its launch was four months ahead of schedule. Lairds in my constituency has a huge Dome rig contract which is on time and the workers are working six and a half days a week to ensure that that order is delivered on the day it should be.

We have a small gas order and the yard is making a massive effort to ensure that it is delivered on time. That record of achievement gives rise to the pride of which I spoke. It was not achieved by the trade union side maintaining its restrictive practices. That is why the workers that I represent in that yard will be angry when they hear or read what the Minister has said. He emphasised their lack of performance and poor productivity. However, hon. Members should consider that record of achievement which I have described against the background of a shortening order book. It is easier to get workers to change their attitudes when the order book is long, but it is damned difficult to get them to do so when the last order is being completed.

The workers angrily ask what more they have to do to win orders. My hon. Friend the Member for Bebington and Ellesmere Port will bear me out when I say that at the last general election people were told in Merseyside that if they voted for the Conservative party there would be not just another order, but more orders in the shipyard. We are waiting for our first major order for Cammell Laird since the election, and, as I have said, I want to convey the anger and pride of those workers.

Many Opposition Members talk about productivity and the need to improve it. The Minister assumes that we live in a simple world and that productivity depends solely on labour practices. It does not. Even so, we must be prepared to talk about productivity levels and to consider how much better our performance must be if we are to survive as a shipbuilding nation. Three suggestions have been made to the Minister by Opposition Members. My right hon. Friend the Member for Salford, West (Mr. Orme) suggested that a subsidy should be offered to British owners to build in British yards, and that proposals will come up in the Finance Bill. It has also been suggested that we should bring forward defence orders, and that we should build on spec in the faith that we shall win customers for those orders.

The Government should consider those proposals seriously and then act. I expect that there will be strings attached and that any concession on these fronts will be tied closely to increases in performance, output and productivity. That is right. However, the message from Cammell Laird is that if there are ships to build there will be no productivity at all. It is as simple as that.

9.13 pm

Mr. Michael Grylls (Surrey, North-West)

I shall be brief, because other hon. Members wish to speak in the debate. I shall concentrate my remarks on the warship yards, because there has been a serious reduction in our capability to play a full part in the export of warships. Before nationalisation, the warship yards largely existed on export business, as opposed to building purely for the Royal Navy.

For example, Vosper Thornycroft used to get 70 per cent. of its business from overseas. The figure recently suggested by Sir Robert Atkinson is that that company might try to obtain 30 per cent. of its business from overseas orders. Although there has been a shortage of orders in merchant shipping there has not been the same shortage of orders in warship building. In the last two to three years there has been £2,000 million-worth of export orders for warships, but Britain has hardly seen any of that. Almost all the orders have gone to Germany, Italy or other European countries.

The business has been there but the tragedy is that British shipbuilding yards have not succeeded in getting it. Whatever the reason, I strongly believe — this probably applies to the whole of shipbuilding but particularly to warship building — that independent privately owned yards are more likely to be successful in obtaining orders than large bureaucratic corporations such as British Shipbuilders. I cannot believe for a moment that, had Sir Eric Yarrow been running Yarrows in Glasgow and had Sir John Rix been running Vosper Thornycroft in Southampton and Portsmouth, they would have allowed the Cunard vessel to be repaired in Malta. They would have ensured, one way or the other, that they received that business. I cannot believe that those experienced and dedicated shipbuilders would have allowed that business to go overseas, but that is history.

I hope that my hon. Friend the Minister of State will, at the earliest possible opportunity, use his powers under the British Shipbuilders Act 1983 to return the warships yards to the private sector so that they can operate as independent companies fighting for business not only in Britain but in all parts of the world. They could then go out to win orders from other countries to build warships in the same dedicated way they won them before nationalisation. That is my message to my hon. Friend. In that way we are more likely to be successful and are more likely to maintain for our country an effective and up-to-date warship building capacity which, I believe, both sides of the House wish to see maintained.

Mr. Speaker

I should like to thank hon. Members for being brief. To the two hon. Members who remain, I say that the replies are expected to begin at 9.30 pm. We can help each other.

9.16 pm

Mr. Don Dixon (Jarrow)

The question being asked by Opposition Members and by shipbuilding workers is, "Do the Government want a shipbuilding industry?" We believe that for Britain as an island nation, it is absolutely essential. However, the Government's actions since they were elected in 1979 leave doubts in the minds of Opposition Members and in the minds of those who work in the shipbuilding industry.

After the war, when the order books were full, the British shipbuilding industry in private hands would not invest a brass farthing in the shipyards. That is why they were uncompetitive with the Japanese, the Swedes, the Koreans and so on. When the Minister says that since nationalisation, £600 million has been invested in the shipbuilding industry, I remind him that the seven main shipyards in Japan invested £620 million last year alone. Indeed, Korea is investing £400 million a year in its shipbuilding industry. We are sick and tired of hearing about how the industry fared when it was in private hands. Our industry's orders went down by 15 per cent. in 1962, so the Patten report was commissioned which pointed to a lack of investment in the shipbuilding industry. Orders continued to decline and in 1966 the Geddes report blamed lack of investment and said that the industry needed coordination and rationalisation. The shipbuilding board was then set up. Orders still declined, so we had the BoozAllen report in 1972, which was the blueprint for nationalisation. But for the nationalisation of the industry by the previous Government, we would not be having this debate about the shipbuilding industry tonight. Let us make no bones about that.

I wish to refer to the orders to which my right hon. Friend the Member for Salford, West (Mr. Orme) referred. The order for the P and 0 liner valued at £90 million went to Finland. When my right hon. Friend wrote to the Prime Minister to complain, the right hon. Lady wrote back to say that Harland and Wolff and Swan Hunter could not compete for the order because of the lack of tradesmen. In Tyne and Wear there are 5,000 tradesmen—people who have worked in the shipbuilding industry all their lives—without work. Yet the Prime Minister gave the lack of workers as the reason for the order going to Finland.

Twelve months ago, when the Falklands dispute arose, shipyard workers who had been thrown out of work months earlier were brought back and they worked round the clock to get the task force ready to go to the Falklands. At the same time Lord Matthews was stating in his newspapers that we must be patriotic. His patriotism was shown when it was suggested that the Atlantic Conveyor replacement should be built in Korea. Now we hear that the Cunard Countess is to be refitted in Malta. Is that patriotism? Patriotism in this country is determined by the thickness of one's money belt, not by where one lives or works. That is the problem the British shipyard workers have had to face for so long.

The Minister said that it was costing £7,000 to keep each shipyard worker in employment. It costs £6,000 to put each one on the dole. Where are the economics in that? Would it not be better to keep them in employment:, competing and building ships, so maintaining a viable industry, rather than allowing them to stand on street corners kicking their heels? The Minister can take that smirk off his face because I am not talking silly. I am talking about human beings and the sooner some right hon. and hon. Gentlemen start talking about human beings, the better life will be for the people about whom we are concerned tonight.

When we are talking about a shipyard worker we are talking about a wage earner, a man with a family to keep and children to feed. We are not talking simply of statistics or percentages, and the Minister must realise that. He is sitting there with a smirk on his face, when we have been lobbied today by people who are worried about their industry and their future — about their families, their towns and communities. We do not require that sort of attitude from the Minister.

We in the shipbuilding industry have had 25,000 redundancies since nationalisation. We have seen shipyards, ship repair yards and engine works close down. There has been full co-operation from the workers, who have fallen from third to 19th in the wages league in Britain during that period of co-operation. They cooperated because they thought they had some interest and say in their industry, but it has all been a sham because of the attitude of the Government and the measure they have just introduced.

I assure Conservative Members who speak of privatisation that we have had enough of the industry being in private hands. I had enough of that from the age of 14 until the shipyards were nationalised in 1977 and I became a Member. We have seen what private shipbuilders can do for Britain. They ruined the shipbuilding industry, and we want no more of that. My hon. Friend the Member for Wallsend (Mr. Garrett) referred to the demonstration yesterday when the last ship left Hebburn and Palmer's. Nobody condones people banging on cars, spitting at people and calling them names, but one must try to understand why they were demonstrating in that way. Those men were losing their jobs. They knew that in their area they would have no chance of another job.

The sooner it is realised that they are human beings and that they will react in that way, the better. Do Conservative Members want people, on being declared redundant, to go the labour exchange like zombies? We want people to fight for their jobs. We wanted them to fight in the Falklands, 8,000 miles away, last year. Why should they not fight for their jobs in their own communities this year?

There is much more I could say but I shall conclude because my hon. Friend the Member for South Shields (Dr. Clark) must have an opportunity to speak. He comes from the same district as I do, an adjoining constituency, and his constituents have suffered a tremendous number of redundancies. In a democratic society the right to work is as fundamental as the right to free speech, and the sooner the Government realise that the better.

9.24 pm

Dr. David Clark (South Shields)

The amendment asks us to welcome Her Majesty's Government's measures to sustain the shipbuilding industry. I wish that I could. My hon. Friend the Member for Jarrow (Mr. Dixon) has just made an angry and genuine speech and he represents the feelings of British shipyard workers.

I have told the Minister that nothing has made the shipyard workers more angry than the fiasco over the Falklands campaign. Yet again, the men saw themselves as pure lobby fodder of a Conservative Government. The way in which the Government called upon the skills of those men whom they had discarded months before was callous in the extreme. They were discarded then just as they were discarded in the 1930s. However, the Government did call upon them and those men worked around the clock to launch ships not weeks but months ahead of schedule to meet the deadlines because they believed in their country. But when it comes to the refits, very little work comes to the river Tyne, although much goes overseas. I must admit that we do not think much of the patriotism of the owners of British shipping.

I am sorry that we do not have a Minister from the Ministry of Defence here today. We know that the merchant and the naval sides are interlinked. Many lessons can be learnt from the Falklands campaign and the Government can take many positive steps to help. I want to make one or two suggestions. For example, only in an extreme emergency should any foreign vessel be chartered for campaigns such as the Falklands. Yet we chartered vessels from Norway and Denmark. Indeed, if pressure had not been put on the Secretary of State for Defence, the Ministry of Defence would have bought a Scandinavian vessel—MV England. It was called off at the eleventh hour. It is scandalous that the Ministry of Defence should contemplate buying foreign vessels, and I hope that the Minister will discuss that point with the Ministry of Defence.

There are about 150 supply ships plying in the British section of the North sea. About 50 of them are Norwegian vessels. Of the 54 supply vessels that operate in the Norwegian section of the North sea— I hope that the Minister is paying attention to this—not one is British, if my memory serves me correctly. Yet one third of the vessels in the British section are Norwegian. I know that the Minister has seen the Norwegian minister of shipping and commerce and I hope that he can tell the House, either now or later, what progress he has made in negotiating safety regulations, a closed shop, or whatever. There is some protectionism going on in the North sea. Other Governments are not playing the game in the way in which we unfortunately always seem to.

The Minister has a duty to stimulate our home industry, but we have lost too many vessels. For example, it is an open secret that British Nuclear Fuels Ltd. will order at least one more vessel. I presume that that will be built in Britain as all the others have been. I hope that the Minister will give us an assurance tonight on that point. The Government are asking us to support their measures, but I do not see any. To tackle the problem within the scope of the EC is perhaps to bark up the wrong tree because the EC will work only if there is sufficient capacity, evenly spread, throughout the EC countries. Plainly, that is not so in shipbuilding. An example is the compensation given to shipyard workers or shipbuilding areas in the EC compared with the aid given to the former steel and coal areas. The situation is completely different. Therefore, to try to tackle the problem within the EC is not the answer. I cannot understand why the Minister does not appreciate this point.

My hon. Friend the Member for Jarrow (Mr. Dixon) said that it costs about £6,000 to keep a person out of work. That is purely in financial terms, forgetting the social costs and so on. Possibly the cost is more than that. The Minister admits that some shipyard workers have been costing the country £7,000. I accept that. Why is it wrong to subsidise the British shipyard worker to the extent of £7,000 when it is not wrong to subsidise the British farmer to the tune of, on average, £8,000 or £9,000 every year? I do not see the logic of that. The Minister explains it by saying that ships are lying idle and that they are all laid up. However, there are mountains of butter and beef and wine lakes, yet we are still subsidising farmers to produce surpluses.

There is sense in subsidising the farmers because there is sense in keeping a viable agriculture industry. It is good for strategic and economic purposes. However, what is good for farming is good for shipbuilding when we are an island. It is nonsensical to adopt any other policy. It is rank stupidity to follow the policy that the Government are following deliberately to run down the shipbuilding industry.

9.31 pm

Dr. John Cunningham (Whitehaven)

At least everyone who has spoken in the debate has agreed that the shipbuilding industry and the ship repair industry in Britain are facing a deep and prolonged crisis. It is no accident that the debate has been dominated by speakers from the north of England. Contributions have been made by Scots and also by my hon. Friend the Member for Birkenhead (Mr. Field), where the problem is most acute.

The problem is in the merchant shipbuilding, ship repair and offshore divisions of British Shipbuilders. The interesting thing about the debate, which is one of a number that we have had in this Parliament, is that we have had the same sort of speech from the Minister of State as in almost every other debate on shipbuilding.

The Minister made a lengthy speech, but in reality told us little about the Government's intentions. He said that there had been plenty of warning about the crisis and that it had not come upon the industry suddenly. That is right. It has not come upon the Government suddenly, either. There is absolutely no excuse for the Government not to tell the House and the industry what their intentions are.

During their term of office, the Government have introduced two Bills on the shipbuilding industry. One we welcomed and supported and the other we opposed violently. We oppose privatisation as an irrelevance to the problems of the shipbuilding industry. It is now seen as just that. Did the Minister of State tell us at any time that he would use the provisions of the Government's much-vaunted Act to help the industry in its present crisis? Of course not, because he recognises that there is no way in which the provisions of the Act can help the industry in the present serious state of affairs.

The Minister said rather sanctimoniously that whatever assistance the Government might give to the industry, the shipyard workers had to improve their performance. I told him in an intervention and I tell him again that it comes ill from Ministers in this Government to say to workers in the industry that they must go on and on improving their performance when the prospect facing them is the dole queue.

I shall briefly remind the House of the performance of the workers since vesting day. The unions have cooperated in the complete restructuring of the industry, which is almost unprecedented in British industry. They have co-operated in reducing by 25,000 the number of workers in the industry, and in reducing 168 different bargains to two. For the past four years they have cooperated in accepting wage settlements below the rate of inflation. They have co-operated on improving productivity, and time lost, which is the lowest of any industry. They have co-operated in trying to achieve a better image for the industry worldwide, which had led to orders.

For the Minister now to say that they must continue with that when they have been told that about 10,000 of them will face the dole is to add insult to injury. The men in the industry wish to improve productivity and wish to be as effective as other shipbuilding industries, but how can workers improve productivity when they have no work? How can they improve productivity in berths in shipyards that are standing idle? It is nonsense to suppose that they can improve their performance on a declining throughput of business. That is the fallacy in what the Minister asks the shipyard workers to do, and that is why they reject it.

It is not good enough for the Minister to say that the Government have made strong representations with the EC about the behaviour of the Japanese and the Koreans. He talked about world excess capacity, but only this week Hyundai announced plans to open a second major offshore yard. Apparently the representations fell on deaf ears. Representations by OECD countries to Japan also had little impact. Japanese yards accounted for 68 per cent. of the total OECD tonnage in 1981, which shows how much they dominate world shipbuilding and OECD ordering. It is no good us reducing shipbuilding capacity in Britain because that will make no difference, or very little, to the worldwide excess capacity.

Not only was much of the Minister's speech disappointing, but much of it was irrelevant to the problems facing British shipbuilding. He mentioned the possibility of improved credit terms for ship purchasers, but that was the limit to any change in Government policy towards this vital and strategic industry. Rather like his speech, the Government amendment to our motion is irrelevant. It states that the House should welcome the Government's measures to sustain the industries, but it is plain that the Government's policies do not do that. That is the reality of the crisis. Far from being sustained, the industries are going down the drain.

How Conservative Members, some of whom, especially the hon. Member for Devon, North (Mr. Speller), spoke to great effect about the problems in their constituencies, can vote for this motion, I do not know. I noticed that the hon. Member for Devon, North did riot say that the workers in a yard in his constituency asked him to tell the Government that they did not wish to be sold off, and that they wished to remain part of the British Shipbuilding Corporation because they believed that it offered them the best hope of survival.

Against the Government amendment we should set the shipbuilding and ship repair business, which is bleeding away from Britain. The result has not simply been that a mass of expenditure has been lost by shipyards but, as many of my right hon. and hon. Friends have pointed out, marine equipment manufacturers, the marine industry and the steel industry have lost severely. That goes right through the British economy.

I shall list a few of the orders in question. One was for the P and 0 liner that went to a Finnish yard. An emergency support vessel for a British company in the North sea has also gone to a Finnish yard. An order for a vessel for the CEGB is going to Korea. There is the prospect of an order for a British Nuclear Fuels vessel —another public company—going to the far east. The latest, and one of the most insulting fiascos, is the Cunard Countess contract, which is going to a Maltese yard. That exposes the hypocrisy of Cunard after the massive row we had about the replacement for the Atlantic Conveyor. Cunard has pulled the same trick on the Government again with another vessel from the south Atlantic.

The hon. Member for Surrey, North-West (Mr. Grylls) shakes his head. Perhaps he does not know that the Ministry of Defence agreed a cash deal with Cunard and then said that it would not exercise any control over where that taxpayers' money was spent. Does he regard that as effective government, or an example of a Government who are concerned about the future of the British shipbuilding and ship repair industries, or the jobs of shipyard workers? If he does, he has an odd way of looking at the problem.

Since the Government took office, several hundred million pounds worth of business has gone abroad. Far from introducing policies to support the industry, the Government have merely presided over its decline. Ministers and Conservative Members have a favourite phrase. They say that throwing money at industry does not solve its problems. However, that is precisely what the Government have done. They have extended cash limits but done nothing else. They have introduced no new policy initiatives apart from their Bill on privatisation. They have made no fundamental changes in maritime policy of any significance in four years. The Government are failing and it is no surprise.

Nor is it any surprise that my hon. Friend the Member for Jarrow (Mr. Dixon) and others expressed deep anger about what is happening in the shipbuilding communities of Tyneside and Wearside, which are in the region that already has the highest level of unemployment in Britain outside Northern Ireland. They face calamity, as do those people who work on the Clyde, where 20,000 jobs depend directly, and at least twice as many depend indirectly, on the shipbuilding industry.

Having listened to many speeches in the past four years, I believe that far too many Government supporters have no conception of what life is like in those communities or how young children who are coming out of school feel—

Mr. Barry Porter

Nonsense.

Dr. Cunningham

Nor have they any idea how well-qualified, energetic and enthusiastic young people who are leaving school feel when there is not the slightest chance of their getting a job in the foreseeable future. Many Tory hon. Members would do well to look at and listen to some of those people and their representatives to find out what the Government policies that they support are doing to the young generation in those areas.

Without major new policy initiatives, shipbuilding, merchant shipbuilding, ship repairing and offshore platform building industries are likely to go to the wall. The chairman of British Shipbuilders believes that time is short. The Minister talked of discussions and of arriving at policies that are acceptable to the EC. There is no time for that. The Minister's predecessor, the hon. Member for Bosworth (Mr. Butler), who is now Minister of State, Northern Ireland Office, said in July 1979 that the Government were committed to a scrap and build policy and would discuss this with our EC partners. That ran into the sand — no progress, no decision, no policy. The record of the EC on the shipbuilding industry of Europe is abysmal, and there is no hope of salvation from that direction. Far from this being a good idea, it is a bad one. It will delay any decision by the Government and will probably mean that many of our shipyard workers are on the dole before any conclusions are reached.

We need strenuous and urgent efforts now to obtain orders for our shipyard workers — naval orders and merchant shipbuilding orders, as almost everyone who has spoken in the debate has agreed. Public sector orders could be accelerated, building of stock or speculative building should be introduced, scrap and build policies should be re-examined and better incentives for British shippers to build ships in Britain should be introduced. We need a maritime strategy. We moved an amendment to the British Shipbuilders Bill, but the Government rejected it while making no new intitiatives themselves.

I regret to say that there is no sign of a recognition of the urgency of the problem, or of a change in attitude in anything that the Minister has had to say to the House today. In the shipbuilding regions we are face to face not with crisis, but with catastrophe. As my hon. Friend the Member for Jarrow and others said, we face not just industrial catastrophe but social catastrophe on the Clyde, the Tyne, the Wear, in Merseyside and throughout the British engineering industry. The future is bleak and grim, as the Minister said.

The Government have no policy initiatives to put before the House. We have heard nothing from them tonight that convinces us that the shipbuilding industry is safe in their hands after four years of their administration. The Government have no excuses and no policies.

9.47 pm

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

I fully understand the feeling, passion and commitment that have been shown by hon. Members on both sides of the House, but particularly by the hon. Members for Jarrow (Mr. Dixon) and for South Shields (Dr. Clark) about the current crisis. I reject the implications by the hon. Member for Whitehaven (Dr. Cunningham) that somehow the Government do not understand or may not have observed the difficulties that he has seen in the north and north-east. My hon. Friend the Member for Bebington and Ellesmere Port (Mr. Porter) would question that observation. I too would maintain as strongly as I can that Conservative Members do not confine themselves to the bourgeois aspects of life. We too are aware that there are grave social and economic difficulties in that part of the world.

The right hon. Member for Sunderland, North (Mr. Willey) spoke of orders in Mexico, Sweden and India. In Mexico, British Shipbuilders is optimistic that we shall secure the business. In Sweden, negotiations are continuing and I am hopeful of a quick and favourable outcome. In India, British Shipbuilders has not been in touch recently, but is willing to consider any proposal that India might put to it.

Many hon. Members have mentioned the difficulties caused internationally by far eastern competition in this market. The hon. Member for Whitehaven said that Japan was subsidising its orders to the tune of 15 per cent. That was the import of an article from Lloyd's List. It is also said in the same article that it must move towards covering its costs and, indeed, competitive tendering.

The intervention fund, which helps British companies to meet the prices which are charged internationally, thus far amounts to £128 million. I suppose that our international competitors could also argue that, by putting in £453 million of public dividend capital, we too are assisting our domestic industry in forms which may not be considered to be entirely on the basis of covering one's costs or raising one's equity capital at a real market rate.

Some hon. Members have this evening blamed the difficulties of our merchant shipbuilding industry on unfair competition from the far east, and on many occasions the prime culprit has been identified as Korea. We should be wary of putting all the blame for our problems on unfair competition. The fact is that Korea, for example, has a substantial competitive advantage over the United Kingdom. It has come late to the business. Its industry is very new and has the benefit of considerable recent investment. Labour is cheaper and workers are prepared to accept working practices which would be unacceptable to their British counterparts.

I join members of the Opposition in paying a tribute to the industry for the improvements in productivity that have been obtained, the great steps that have been made in many of our shipyards and the willingness of management and unions to co-operate in the face of the current crisis. I have to say to Opposition Members, however, that they would have extreme difficulty in persuading the people whom they represent, the constituents whose cause they have espoused with great vigour tonight, that they should take a wage cut. They are presumably already having great difficulty in understanding why another set of redundancies is coming into effect.

When we consider our competitive advantage or disadvantage with regard to Korea, we should bear it in mind that it is prepared to use methods which are far more radical than those which we have used. These are Korean economic advantages that we have to live with.

The key question is whether the competition offered is unfair. The Korean and other industries have certainly had investment support, but so have the United Kingdom and all European industries. It is clearly not unfair as far as the Koreans are concerned to work those longer hours for less money. If unfairness is involved it must be in the form of hidden subsidies. It has proved exceedingly difficult to produce evidence of such subsidies. Even if we could produce the evidence, Korea, as a developing country, is not covered by the sort of OECD arrangements which we would wish to invoke in order to pursue our grievance.

It may be hard to believe that a country could so successfully build up its industry at a time of deep recession while its competitors are experiencing severe difficulties, but the simple fact is that mere suspicions of unfairness take us nowhere.

I repeat the commitment made by my hon. Friend the Minister of State on this occasion and many others, and I address this particularly to my hon. Friend the Member for Eastleigh (Sir D. Price). We shall pursue with all vigour complaints of unfair competition—and indeed of dumping, to take up the point made by my hon. Friend — in the appropriate arena should that evidence be presented to us. I can say tonight that we shall refocus our attention on this matter, but I appeal to all hon. Members and to the domestic industry itself to give us the hard evidence, which we will use to the best effect possible.

Dr. J. Dickson Mabon

Is it not the case that Sir Robert has made public speeches criticising the extraordinary subsidisation of the Korean industry, and its dumping practices? Is it not enough for the chairman of a public industry appointed by the Government to make this point for the Government to believe it?

Mr. Butcher

We and Sir Robert have the same problem, which is that, although we have a very firm view that Korea cannot compete in the way that it is competing, we need the sort of documentation that is very hard to come by in order to pursue that case in the appropriate quarter. I take the right hon. Gentleman's point, of course, that we should pay very close regard to those whore we represent who feel aggrieved that cheating is going on.

The Cunard Countess has been the subject of heated debate, although perhaps more outside than in the House today. The Government have been concerned throughout to ensure that post-Falklands refits are carried out in United Kingdom yards. Many United Kingdom yards, public and private, have gained greatly from those contracts. One order—the Uganda—was diverted from Malta to Vosper Thornycroft in Southampton for that very reason. As my hon. Friend the Minister of State said earlier, under the charter with Cunard very heavy penalties were due from the Government in the event of delay. We agreed a deferment, but the penalties still applied from the later date. The penalties cannot be precisely quantified as they are contingent upon the length of delay and the compensation that might be payable to Cunard for losses actually suffered. There is every likelihood, however, that they would have been twice or more than twice the value of the work.

The ship repair section of British Shipbuilders quotes for about 40 jobs per month, so we should consider this job in context. It normally has a 25 per cent. success rate. It treated this quotation very seriously, sending four men to Ascension Island. It quoted on 80 days, although it thinks that it could have done the job in 67 days. Incidentally, I agree with Opposition Members that British Shipbuilders doubts whether the Maltese can get 5,000 workpeople into the ship and do the work in the time. Nevertheless, British Shipbuilders had to weigh the balance of advantage and it concluded that it could not live with the impact of the financial penalties against the foreshortened time scale. Harland and Wolff and Smith's ship repairers were persuaded by the same arguments. They too, found it impossible to match Cunard's requirements.

Many questions have been raised about scrap and build. The short answer is that, however one devises the policy, it is usually a policy for the scrapyards rather than for the shipbuilding industry.

The House will be aware that other countries such as Belgium and Denmark offer more advantageous credit terms than we do, but they do not give production subsidies. If both elements of support are taken together, the United Kingdom comes about halfway up the league in terms of assistance.

My hon. Friend the Member for Eastleigh raised a number of questions on defence orders. The Carrington declaration, if I may so describe it, was some time ago. I will write to my hon. Friend about this. Since British Shipbuilders was formed, it and the Government have agreed that particular yards should be the lead yards for particular classes of vessel. Follow-on orders are allocated after discussion and tender procedures among the other warship and mixed yards.

A number of hon. Members referred to advance Ministry of Defence orders. A number of orders are expected to be announced later this year, including the first of a new class of conventional submarines and several other vessels, but I will ensure that my hon. Friend the Minister of State for Defence Procurement takes careful note of what has been said.

The right hon. Member for Salford, West (Mr. Orme) pointed out that to some extent this is a regional problem, as it certainly is. That is why £1.1 billion in aid is going to the northern region in section 7 and section 8 assistance, £1 billion to the north-west and £1.3 billion to Scotland. We have not been backward in the help that we have given, precisely because there were structural difficulties in those areas.

The hon. Member for Newcastle upon Tyne, West (Mr. Brown) asked about the Government's commitment. We have given our commitment to the industry in the best possible way. On gross capital expenditure, the funding of capital — the investment programme for British Shipbuilders and its future — was £27 million in 1978–79, £18 million in 1979–80, £17 million in 1980–81 and £37 million in 1981–82—and £90 million is planned for 1983–84. That is not the manifestation of the policy of a Government who are not committed to a strong future for British Shipbuilders. We are spending £15 million on computer-aided design, computer-aided manufacture and computerisation. That is an investment for the future.

I take the point of my hon. Friend the Member for Eastleigh that the merchant marine is required for strategic reasons. In reply to the hon. Member for Wallsend (Mr. Garrett), we do accept the reality. My hon. Friend the Member for Bebington and Ellesmere Port asked about defence orders; these certainly are in order. I fully understand that the constituents of the hon. Member for Birkenhead (Mr. Field) feel pride and anger. We have to deal with realities.

Question put, That the original words stand part of the Question:—

The House divided: Ayes 216, Noes 278.

Division No. 119]	[10 pm
AYES
Abse, Leo	Coleman, Donald
Allaun, Frank	Concannon, Rt Hon J. D.
Alton, David	Cook, Robin F.
Anderson, Donald	Cowans, Harry
Archer, Rt Hon Peter	Cox, T. (W'dsw'th, Toot'g)
Ashley, Rt Hon Jack	Craigen, J. M. (G'gow, M'hill)
Ashton, Joe	Crowther, Stan
Atkinson, N.(H'gey,)	Cryer, Bob
Bagier, Gordon A.T.	Cunliffe, Lawrence
Barnett, Guy (Greenwich)	Cunningham, G. (Islington S)
Barnett, Rt Hon Joel (H'wd)	Cunningham, Dr J. (W'h'n)
Bennett, Andrew(St'kp't N)	Dalyell, Tam
Bidwell, Sydney	Davidson, Arthur
Booth, Rt Hon Albert	Davies, Rt Hon Denzil (L'lli)
Boothroyd, Miss Betty	Davis, Clinton (Hackney C)
Bottomley, Rt Hon A.(M'b'ro)	Davis, Terry (B'ham, Stechf'd)
Bray, Dr Jeremy	Deakins, Eric
Brown, Hugh D. (Provan)	Dean, Joseph (Leeds West)
Brown, R. C. (N'castle W)	Dewar, Donald
Brown, Ronald W. (H'ckn'y S)	Dixon, Donald
Brown, Ron (E'burgh, Leith)	Dobson, Frank
Buchan, Norman	Dormand, Jack
Callaghan, Jim (Midd't'n & P)	Dubs, Alfred
Campbell, Ian	Duffy, A. E. P.
Campbell-Savours, Dale	Dunwoody, Hon Mrs G.
Canavan, Dennis	Eadie, Alex
Cant, R. B.	Eastham, Ken
Carmichael, Neil	Edwards, R. (W'hampt'n S E)
Clark, Dr David (S Shields)	Ellis, R. (NE D'bysh're)
Clarke, Thomas(C'b'dge, A'rie)	Ellis, Tom (Wrexham)
Cocks, Rt Hon M. (B'stol S)	English, Michael

Ennals, Rt Hon David	Mitchell, R. C. (Soton Itchen)
Evans, loan (Aberdare)	Morris, Rt Hon A. (W'shawe)
Evans, John (Newton)	Morris, Rt Hon C. (O'shaw)
Field, Frank	Morris, Rt Hon J. (Aberavon)
Flannery, Martin	Moyle, Rt Hon Roland
Ford, Ben	Oakes, Rt Hon Gordon
Forrester, John	O'Brien, Oswald (Darlington)
Foster, Derek	Ogden, Eric
Foulkes, George	O'Halloran, Michael
Fraser, J. (Lamb'th, N'w'd)	O'Neill, Martin
Freud, Clement	Orme, Rt Hon Stanley
Garrett, John (Norwich S)	Palmer, Arthur
Garrett, W. E. (Wallsend)	Park, George
Ginsburg, David	Parker, John
Golding, John	Parry, Robert
Graham, Ted	Pavitt, Laurie
Grant, John (Islington C)	Pendry, Tom
Grimond, Rt Hon J.	Pitt, William Henry
Hamilton, James (Bothwell)	Powell, Raymond (Ogmore)
Hamilton, W. W. (C'tral Fife)	Price, C. (Lewisham W)
Hardy, Peter	Race, Reg
Harman, Harriet (Peckham)	Radice, Giles
Harrison, Rt Hon Walter	Rees, Rt Hon M (Leeds S)
Hattersley, Rt Hon Roy	Richardson, Jo
Haynes, Frank	Roberts, Albert (Normanton)
Healey, Rt Hon Denis	Roberts, Allan (Bootle)
Heffer, Eric S.	Roberts, Gwilym (Cannock)
Hogg, N. (E Dunb't'nshire)	Robertson, George
Holland, S. (L'b'th, Vauxh'll)	Rooker, J. W.
Home Robertson, John	Roper, John
Homewood, William	Ross, Ernest (Dundee West)
Hooley, Frank	Ryman, John
Horam, John	Sandelson, Neville
Howell, Rt Hon D.	Sever, John
Hoyle, Douglas	Sheldon, Rt Hon R.
Hughes, Mark (Durham)	Shore, Rt Hon Peter
Hughes, Robert (Aberdeen N)	Short, Mrs Renée
Hughes, Roy (Newport)	Silkin, Rt Hon J. (Deptford)
Hughes, Simon (Bermondsey)	Silverman, Julius
Jay, Rt Hon Douglas	Skinner, Dennis
Jenkins, Rt Hon Roy (Hillh'd)	Smith, Rt Hon J. (N Lanark)
John, Brynmor	Snape, Peter
Johnson, James (Hull West)	Soley, Clive
Johnson, Walter (Derby S)	Spearing, Nigel
Jones, Barry (East Flint)	Spriggs, Leslie
Kerr, Russell	Stallard, A. W.
Kilroy-Silk, Robert	Stewart, Rt Hon D. (W Isles)
Lambie, David	Stoddart, David
Lamond, James	Strang, Gavin
Leadbitter, Ted	Straw, Jack
Leighton, Ronald	Summerskill, Hon Dr Shirley
Lewis, Arthur (N'ham NW)	Thomas, Mike (Newcastle E)
Lewis, Ron (Carlisle)	Thorne, Stan (Preston South)
Litherland, Robert	Tilley, John
Lofthouse, Geoffrey	Tinn, James
Lyon, Alexander (York)	Varley, Rt Hon Eric G.
Lyons, Edward (Bradf'd W)	Wainwright, E.(Dearne V)
Mabon, Rt Hon Dr J. Dickson	Walker, Rt Hon H.(D'caster)
McDonald, Dr Oonagh	Watkins, David
McElhone, Mrs Helen	Weetch, Ken
McKay, Allen (Penistone)	Welsh, Michael
McKelvey, William	White, Frank R.
MacKenzie, Rt Hon Gregor	White, J. (G'gow Pollok)
Maclennan, Robert	Whitlock, William
McNally, Thomas	Wigley, Dafydd
McNamara, Kevin	Willey, Rt Hon Frederick
McTaggart, Robert	Williams, Rt Hon A.(S'sea W)
McWilliam, John	Wilson, Gordon (Dundee E)
Marks, Kenneth	Wilson, William (C'try SE)
Marshall, D(G'gow S'ton)	Winnick, David
Marshall, Dr Edmund (Goole)	Woodall, Alec
Marshall, Jim (Leicester S)	Woolmer, Kenneth
Martin, M(G'gow S'burn)	Wrigglesworth, Ian
Mason, Rt Hon Roy	Wright, Sheila
Maxton, John	Young, David (Bolton E)
Mikardo, Ian
Millan, Rt Hon Bruce	Tellers for the Ayes:
Miller, Dr M. S. (E Kilbride)	Mr. George Morton and
Mitchell, Austin (Grimsby)	Mr. Hugh McCartney.

NOES
Adley, Robert	Fletcher, A. (Ed'nb'gh N)
Aitken, Jonathan	Fletcher-Cooke, Sir Charles
Alexander, Richard	Fookes, Miss Janet
Alison, Rt Hon Michael	Forman, Nigel
Amery, Rt Hon Julian	Fowler, Rt Hon Norman
Ancram, Michael	Fox, Marcus
Arnold, Tom	Fraser, Peter (South Angus)
Aspinwall, Jack	Fry, Peter
Atkins, Rt Hon H.(S'thorne)	Gardiner, George (Reigate)
Atkinson, David (B'm'th.E)	Gardner, Sir Edward
Baker, Kenneth(St.M'bone)	Garel-Jones, Tristan
Baker, Nicholas (N Dorset)	Gilmour, Rt Hon Sir Ian
Banks, Robert	Glyn, Dr Alan
Beaumont-Dark, Anthony	Goodhart, Sir Philip
Bendall, Vivian	Goodhew, Sir Victor
Benyon, Thomas (A'don)	Goodlad, Alastair
Benyon, W. (Buckingham)	Gorst, John
Berry, Hon Anthony	Gow, Ian
Best, Keith	Gower, Sir Raymond
Bevan, David Gilroy	Grant, Sir Anthony
Biffen, Rt Hon John	Gray, Rt Hon Hamish
Biggs-Davison, Sir John	Greenway, Harry
Blackburn, John	Grieve, Percy
Blaker, Peter	Griffiths, E.(B'y St. Edm'ds)
Bonsor, Sir Nicholas	Griffiths, Peter (Portsm'th N)
Bottomley, Peter (W'wich W)	Grist, Ian
Bowden, Andrew	Grylls, Michael
Boyson, Dr Rhodes	Gummer, John Selwyn
Braine, Sir Bernard	Hamilton, Michael (Salisbury)
Bright, Graham	Hannam, John
Brinton, Tim	Haselhurst, Alan
Brittan, Rt. Hon. Leon	Hastings, Stephen
Brooke, Hon Peter	Havers, Rt Hon Sir Michael
Brotherton, Michael	Hawkins, Sir Paul
Brown, Michael(Brigg & Sc'n)	Hawksley, Warren
Browne, John (Winchester)	Hayhoe, Barney
Bryan, Sir Paul	Heath, Rt Hon Edward
Buck, Antony	Heddle, John
Budgen, Nick	Henderson, Barry
Bulmer, Esmond	Hicks, Robert
Burden, Sir Frederick	Higgins, Rt Hon Terence L.
Butcher, John	Hogg, Hon Douglas (Gr'th'm)
Carlisle, John (Luton West)	Holland, Philip (Carlton)
Carlisle, Kenneth (Lincoln)	Hordern, Peter
Carlisle, Rt Hon M. (R'c'n )	Howell, Rt Hon D. (G'ldf'd)
Chalker, Mrs. Lynda	Howell, Ralph (N Norfolk)
Chapman, Sydney	Hunt, David (Wirral)
Churchill, W. S.	Hunt, John (Ravensbourne)
Clark, Hon A. (Plym'th, S'n)	Irvine, RtHon Bryant Godman
Clark, Sir W. (Croydon S)	Irving, Charles (Cheltenham)
Clarke, Kenneth (Rushcliffe)	Jessel, Toby
Clegg, Sir Walter	Jopling, Rt Hon Michael
Cockeram, Eric	Joseph, Rt Hon Sir Keith
Colvin, Michael	Kaberry, Sir Donald
Cope, John	KeMett-Bowman, Mrs Elaine
Cormack, Patrick	Kershaw, Sir Anthony
Corrie, John	Kimball, Sir Marcus
Costain, Sir Albert	King, Rt Hon Tom
Cranborne, Viscount	Knight, Mrs Jill
Critchley, Julian	Knox, David
Crouch, David	Lamont, Norman
Dickens, Geoffrey	Lang, Ian
Dorrell, Stephen	Latham, Michael
Douglas-Hamilton, Lord J.	Lawrence, Ivan
Dover, Denshore	Lawson, Rt Hon Nigel
du Cann, Rt Hon Edward	Lee, John
Dunn, Robert (Dartford)	Le Marchant, Spencer
Durant, Tony	Lennox-Boyd, Hon Mark
Eden, Rt Hon Sir John	Lester, Jim (Beeston)
Eggar, Tim	Lewis, Sir Kenneth (Rutland)
Eyre, Reginald	Lloyd, Ian (Havant & W'loo)
Fairbairn, Nicholas	Lloyd, Peter (Fareham)
Fairgrieve, Sir Russell	Lyell, Nicholas
Faith, Mrs Sheila	Macfarlane, Neil
Farr, John	MacGregor, John
Fell, Sir Anthony	MacKay, John (Argyll)
Fenner, Mrs Peggy	McNair-Wilson, M. (N'bury)
Finsberg, Geoffrey	McNair-Wilson, P. (New F'st)
Fisher, Sir Nigel	McQuarrie, Albert

Madel, David	St. John-Stevas, Rt Hon N.
Major, John	Shaw, Giles (Pudsey)
Marland, Paul	Shaw, Sir Michael (Scarb')
Marlow, Antony	Shelton, William (Streatham)
Marten, Rt Hon Neil	Shepherd, Colin (Hereford)
Maude, Rt Hon Sir Angus	Shepherd, Richard
Mawby, Ray	Shersby, Michael
Mawhinney, Dr Brian	Sims, Roger
Maxwell-Hyslop, Robin	Skeet, T. H. H.
Mayhew, Patrick	Smith, Sir Dudley
Meyer, Sir Anthony	Smith, Tim (Beaconsfield)
Mills, Iain (Meriden)	Speed, Keith
Mills, Sir Peter (West Devon)	Speller, Tony
Miscampbell, Norman	Spicer, Jim (West Dorset)
Moate, Roger	Spicer, Michael (S Worcs)
Monro, Sir Hector	Sproat, Iain
Montgomery, Fergus	Squire, Robin
Moore, John	Stainton, Keith
Morris, M. (N'hampton S)	Stanbrook, Ivor
Morrison, Hon C. (Devizes)	Stanley, John
Morrison, Hon P. (Chester)	Steen, Anthony
Mudd, David	Stevens, Martin
Murphy, Christopher	Stewart, A.(E Renfrewshire)
Neale, Gerrard	Stewart, Ian (Hitchin)
Needham, Richard	Stokes, John
Nelson, Anthony	Stradling Thomas, J.
Neubert, Michael	Tebbit, Rt Hon Norman
Newton, Tony	Temple-Morris, Peter
Normanton, Tom	Thomas, Rt Hon Peter
Nott, Rt Hon Sir John	Thompson, Donald
Onslow, Cranley	Thorne, Neil (llford South)
Oppenheim, Rt Hon Mrs S.	Thornton, Malcolm
Osborn, John	Townend, John (Bridlington)
Page, John (Harrow, West)	Townsend, Cyril D, (B'heath)
Page, Richard (SW Herts)	Trippier, David
Parkinson, Rt Hon Cecil	van Straubenzee, Sir W.
Parris, Matthew	Viggers, Peter
Patten, John (Oxford)	Waddington, David
Pawsey, James	Wakeham, John
Percival, Sir Ian	Waldegrave, Hon William
Pink, R. Bonner	Walker, B. (Perth )
Pollock, Alexander	Walker-Smith, Rt Hon Sir D.
Porter, Barry	Waller, Gary
Prentice, Rt Hon Reg	Ward, John
Price, Sir David (Eastleigh)	Warren, Kenneth
Proctor, K. Harvey	Watson, John
Pym, Rt Hon Francis	Wells, John (Maidstone)
Raison, Rt Hon Timothy	Wheeler, John
Rathbone, Tim	Whitelaw, Rt Hon William
Rees-Davies, W. R.	Whitney, Raymond
Renton, Tim	Wickenden, Keith
Rhodes James, Robert	Wiggin, Jerry
Rhys Williams, Sir Brandon	Wilkinson, John
Ridley, Hon Nicholas	Winterton, Nicholas
Rifkind, Malcolm	Wolfson, Mark
Rippon, Rt Hon Geoffrey	Young, Sir George (Acton)
Roberts, Wyn (Conway)	Younger, Rt Hon George
Rossi, Hugh
Rost, Peter	Tellers for the Noes:
Royle, Sir Anthony	Mr. Carol Mather and
Rumbold, Mrs A. C. R.	Mr. Robert Boscawen
Sainsbury, Hon Timothy

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 33 (Questions on amendments):—

The House divided: Ayes 275, Noes 216.

Division No. 120]	[10.12 pm
Adley, Robert	Atkinson, David (B'm'th.E)
Aitken, Jonathan	Baker, Kenneth(St.M'bone,)
Alexander, Richard	Baker, Nicholas (N Dorset)
Alison, Rt Hon Michael	Banks, Robert
Amery, Rt Hon Julian	Beaumont-Dark, Anthony
Ancram, Michael	Bendall, Vivian
Arnold, Tom	Benyon, Thomas (A'don)
Aspinwall, Jack	Benyon, W. (Buckingham)
Atkins, Rt Hon H.(S'thorne)	Berry, Hon Anthony

Best, Keith	Grant, Sir Anthony
Bevan, David Gilroy	Gray, Rt Hon Hamish
Biffen, Rt Hon John	Greenway, Harry
Biggs-Davison, Sir John	Grieve, Percy
Blackburn, John	Griffiths, E.(B'y St. Edm'ds)
Blaker, Peter	Griffiths, Peter (Portsm'th N)
Bonsor, Sir Nicholas	Grist, Ian
Bottomley, Peter (W'wich W)	Grylls, Michael
Bowden, Andrew	Gummer, John Selwyn
Boyson, Dr Rhodes	Hamilton, Michael (Salisbury)
Braine, Sir Bernard	Hannam, John
Bright, Graham	Haselhurst, Alan
Brinton, Tim	Hastings, Stephen
Brittan, Rt. Hon. Leon	Havers, Rt Hon Sir Michael
Brooke, Hon Peter	Hawkins, Sir Paul
Brotherton, Michael	Hawksley, Warren
Brown, Michael(Brigg & Sc'n)	Hayhoe, Barney
Browne, John (Winchester)	Heath, Rt Hon Edward
Bryan, Sir Paul	Heddle, John
Buck, Antony	Henderson, Barry
Budgen, Nick	Hicks, Robert
Bulmer, Esmond	Higgins, Rt Hon Terence L.
Burden, Sir Frederick	Hogg, Hon Douglas (Gr'th'm)
Butcher, John	Holland, Philip (Carlton)
Carlisle, John (Luton West)	Hordern, Peter
Carlisle, Kenneth (Lincoln)	Howell, Rt Hon D. (G'ldf'd)
Carlisle, Rt Hon M. (R'c'n)	Howell, Ralph (N Norfolk)
Chalker, Mrs. Lynda	Hunt, David (Wirral)
Chapman, Sydney	Hunt, John (Ravensbourne)
Churchill, W. S.	Irvine, RtHon Bryant Godman
Clark, Hon A. (Plym'th, S'n)	Irving, Charles (Cheltenham)
Clark, Sir W. (Croydon S)	Jessel, Toby
Clarke, Kenneth (Rushcliffe)	Jopling, Rt Hon Michael
Clegg, Sir Walter	Joseph, Rt Hon Sir Keith
Cockeram, Eric	Kellett-Bowman, Mrs Elaine
Colvin, Michael	Kershaw, Sir Anthony
Cope, John	Kimball, Sir Marcus
Cormack, Patrick	King, Rt Hon Tom
Corrie, John	Knight, Mrs Jill
Costain, Sir Albert	Knox, David
Cranborne, Viscount	Lamont, Norman
Critchley, Julian	Lang, Ian
Crouch, David	Latham, Michael
Dickens, Geoffrey	Lawrence, Ivan
Dorrell, Stephen	Lawson, Rt Hon Nigel
Douglas-Hamilton, Lord J.	Lee, John
Dover, Denshore	Lennox-Boyd, Hon Mark
du Cann, Rt Hon Edward	Lester, Jim (Beeston)
Dunn, Robert (Dartford)	Lewis, Sir Kenneth (Rutland)
Durant, Tony	Lloyd, Ian (Havant & W'loo)
Eden, Rt Hon Sir John	Lloyd, Peter (Fareham)
Eggar, Tim	Lyell, Nicholas
Eyre, Reginald	Macfarlane, Neil
Fairbairn, Nicholas	MacGregor, John
Fairgrieve, Sir Russell	MacKay, John (Argyll)
Faith, Mrs Sheila	McNair-Wilson, M. (N'bury)
Farr, John	McNair-Wilson, P. (New F'st)
Fell, Sir Anthony	McQuarrie, Albert
Fenner, Mrs Peggy	Madel, David
Finsberg, Geoffrey	Major, John
Fisher, Sir Nigel	Marland, Paul
Fletcher, A. (Ed'nb'gb N)	Marlow, Antony
Fletcher-Cooke, Sir Charles	Marten, Rt Hon Neil
Fookes, Miss Janet	Maude, Rt Hon Sir Angus
Forman, Nigel	Mawby, Ray
Fowler, Rt Hon Norman	Mawhinney, Dr Brian
Fox, Marcus	Maxwell-Hyslop, Robin
Fraser, Peter (South Angus)	Mayhew, Patrick
Fry, Peter	Meyer, Sir Anthony
Gardiner, George (Reigate)	Mills, Iain (Meriden)
Gardner, Sir Edward	Mills, Sir Peter (West Devon)
Garel-Jones, Tristan	Miscampbell, Norman
Gilmour, Rt Hon Sir Ian	Moate, Roger
Glyn, Dr Alan	Monro, Sir Hector
Goodhart, Sir Philip	Montgomery, Fergus
Goodhew, Sir Victor	Moore, John
Goodlad, Alastair	Morris, M. (N'hampton S)
Gorst, John	Morrison, Hon C. (Devizes)
Gow, Ian	Morrison, Hon P. (Chester)
Gower, Sir Raymond	Mudd, David

Murphy, Christopher	Speed, Keith
Neale, Gerrard	Speller, Tony
Needham, Richard	Spicer, Jim (West Dorset)
Nelson, Anthony	Spicer, Michael (S Worcs)
Neubert, Michael	Sproat, Iain
Newton, Tony	Squire, Robin
Normanton, Tom	Stainton, Keith
Nott, Rt Hon Sir John	Stanbrook, Ivor
Onslow, Cranley	Stanley, John
Oppenheim, Rt Hon Mrs S.	Steen, Anthony
Osborn, John	Stevens, Martin
Page, John (Harrow, West)	Stewart, A.(E Renfrewshire)
Page, Richard (SW Herts)	Stewart, Ian (Hitchin)
Parkinson, Rt Hon Cecil	Stokes, John
Parris, Matthew	Stradling Thomas, J.
Patten, John (Oxford)	Tebbit, Rt Hon Norman
Pawsey, James	Temple-Morris, Peter
Percival, Sir Ian	Thomas, Rt Hon Peter
Pink, R. Bonner	Thompson, Donald
Pollock, Alexander	Thome, Neil (Ilford South)
Porter, Barry	Thornton, Malcolm
Prentice, Rt Hon Reg	Townend, John (Bridlington)
Price, Sir David (Eastleigh)	Townsend, Cyril D, (B'heath)
Proctor, K. Harvey	Trippier, David
Pym, Rt Hon Francis	van Straubenzee, Sir W.
Raison, Rt Hon Timothy	Viggers, Peter
Rathbone, Tim	Waddington, David
Rees-Davies, W. R.	Wakeham, John
Renton, Tim	Waldegrave, Hon William
Rhodes James, Robert	Walker, B. (Perth)
Rhys Williams, Sir Brandon	Walker-Smith, Rt Hon Sir D.
Ridley, Hon Nicholas	Waller, Gary
Rifkind, Malcolm	Ward, John
Rippon, Rt Hon Geoffrey	Warren, Kenneth
Roberts, Wyn (Conway)	Watson, John
Rossi, Hugh	Wells, John (Maidstone)
Rost, Peter	Wheeler, John
Royle, Sir Anthony	Whitelaw, Rt Hon William
Rumbold, Mrs A. C. R.	Whitney, Raymond
Sainsbury, Hon Timothy	Wickenden, Keith
St. John-Stevas, Rt Hon N.	Wiggin, Jerry
Shaw, Giles (Pudsey)	Wilkinson, John
Shaw, Sir Michael (Scarb')	Winterton, Nicholas
Shelton, William (Streatham)	Wolfson, Mark
Shepherd, Colin (Hereford)	Young, Sir George (Acton)
Shepherd, Richard	Younger, Rt Hon George
Shersby, Michael
Sims, Roger	Tellers for the Ayes:
Skeet, T. H. H.	Mr. Carol Mather and
Smith, Sir Dudley	Mr. Robert Boscawen.
Smith, Tim (Beaconsfield)
NOES
Abse, Leo	Carmichael, Neil
Allaun, Frank	Clark, Dr David (S Shields)
Alton, David	Clarke, Thomas(C'b'dge, A'rie)
Anderson, Donald
Archer, Rt Hon Peter	Cocks, Rt Hon M. (B'stol S)
Ashley, Rt Hon Jack	Coleman, Donald
Ashton, Joe	Concannon, Rt Hon J. D.
Atkinson, N.(H'gey,)	Cook, Robin F.
Bagier, Gordon A.T.	Cowans, Harry
Barnett, Guy (Greenwich)	Cox, T. (W'dsw'th, Toot'g)
Barnett, Rt Hon Joel (H'wd)	Craigen, J. M. (G'gow, M'hill)
Bennett, Andrew(Sf'fcp'f N)	Crowther, Stan
Bidwell, Sydney	Cryer, Bob
Booth, Rt Hon Albert	Cunningham, G. (Islington S)
Boothroyd, Miss Betty	Cunningham, Dr J. (W'h'n)
Bottomley, Rt Hon k.(M'b'ro)	Dalyell, Tarn
Bray, Dr Jeremy	Davidson, Arthur
Brown, Hugh D. (Provan)	Davies, Rt Hon Denzil (L'lli)
Brown, R. C. (N'castle W)	Davis, Clinton (Hackney C)
Brown, Ronald W. (H'ckn'y S)	Davis, Terry (B'ham, Stechf'd)
Brown, Ron (E'burgh, Leith)	Deakins, Eric
Buchan, Norman	Dean, Joseph (Leeds West)
Callaghan, Jim (MiddTn & P)	Dewar, Donald
Campbell, Ian	Dixon, Donald
Campbell-Savours, Dale	Dobson, Frank
Canavan, Dennis	Dormand, Jack
Cant, R. B.	Dubs, Alfred

Duffy, A. E. P.	Kilroy-Silk, Robert
Dunwoody, Hon Mrs G.	Lambie, David
Eadie, Alex	Lamond, James
Eastham, Ken	Leadbitter, Ted
Edwards, R. (Whampt'n S E)	Leighton, Ronald
Ellis, R. (NED'bysh're)	Lewis, Arthur (N'ham NW)
Ellis, Tom (Wrexham)	Lewis, Ron (Carlisle)
English, Michael	Litherland, Robert
Ennals, Rt Hon David	Lofthouse, Geoffrey
Evans, loan (Aberdare)	Lyon, Alexander (York)
Evans, John (Newton)	Lyons, Edward (Bradf'd W)
Field, Frank	Mabon, Rt Hon Dr J. Dickson
Flannery, Martin	McCartney, Hugh
Ford, Ben	McDonald, Dr Oonagh
Forrester, John	McElhone, Mrs Helen
Foster, Derek	McKelvey, William
Foulkes, George	MacKenzie, Rt Hon Gregor
Fraser, J. (Lamb'th, N'w'd)	Maclennan, Robert
Freud, Clement	McNally, Thomas
Garrett, John (Norwich S)	McNamara, Kevin
Garrett, W. E. (Wallsend)	McTaggart, Robert
Ginsburg, David	McWilliam, John
Golding, John	Marks, Kenneth
Graham, Ted	Marshall, D(G'gow S'ton)
Grant, John (Islington C)	Marshall, Dr Edmund (Goole)
Grimond, Rt Hon J.	Marshall, Jim (Leicester S)
Hamilton, James (Bothwell)	Martin, M(G'gow S'burn)
Hamilton, W. W, (C'tral Fife)	Mason, Rt Hon Roy
Hardy, Peter	Maxton, John
Harman, Harriet (Peckham)	Mikardo, Ian
Harrison, Rt Hon Walter	Millan, Rt Hon Bruce
Hattersley, Rt Hon Roy	Miller, Dr M, S. (E Kilbride)
Haynes, Frank	Mitchell, Austin (Grimsby)
Healey, Rt Hon Denis	Mitchell, R. C. (Soton Itchen)
Heffer, Eric S.	Morris, Rt Hon A. (W'shawe)
Hogg, N. (E Dunb't'nshire)	Morris, Rt Hon C. (O'shaw)
Holland, S. (Ub'th, Vauxh'll)	Morris, Rt Hon J. (Aberavon)
Home Robertson, John	Morton, George
Homewood, William	Moyle, Rt Hon Roland
Hooley, Frank	Oakes, Rt Hon Gordon
Horam, John	O'Brien, Oswald (Darlington)
Howell, Rt Hon D.	Ogden, Eric
Hoyle, Douglas	O'Halloran, Michael
Hughes, Mark (Durham)	O'Neill, Martin
Hughes, Robert (Aberdeen N)	Orme, Rt Hon Stanley
Hughes, Roy (Newport)	Palmer, Arthur
Hughes, Simon (Bermondsey)	Park, George
Jay, Rt Hon Douglas	Parker, John
Jenkins, Rt Hon Roy (Hillh'd)	Parry, Robert
John, Brynmor	Pavitt, Laurie
Johnson, James (Hull West)	Pendry, Tom
Johnson, Walter (Derby S)	Pitt, William Henry
Jones, Barry (East Flint)	Powell, Raymond (Ogmore)
Kerr, Russell	Price, C. (Lewisham W)

Race, Reg	Summerskill, Hon Dr Shirley
Radice, Giles	Thomas, Mike (Newcastle E)
Rees, Rt Hon M (Leeds S)	Thorne, Stan (Preston South)
Richardson, Jo	Tilley, John
Roberts, Albert (Normanton)	Tinn, James
Roberts, Allan (Bootle)	Varley, Rt Hon Eric G.
Roberts, Gwilym (Cannock)	Wainwright, E.(Dearne V)
Robertson, George	Walker, Rt Hon H.(D'caster)
Rooker, J. W.	Watkins, David
Roper, John	Weetch, Ken
Ross, Ernest (Dundee West)	Welsh, Michael
Ryman, John	White, Frank R.
Sandelson, Neville	White, J. (G'gow Pollok)
Sever, John	Whitlock, William
Sheldon, Rt Hon R.	Wigley, Dafydd
Shore, Rt Hon Peter	Willey, Rt Hon Frederick
Short, Mrs Ren6e	Williams, Rt Hon A.(S'sea W)
Silkin, Rt Hon J. (Deptford)	Wilson, Gordon (Dundee E)
Silverman, Julius	Wilson, William (C'try SE)
Skinner, Dennis	Winnick, David
Smith, Rt Hon J. (N Lanark)	Woodall, Alec
Snape, Peter	Woolmer, Kenneth
Soley, Clive	Wrigglesworth, Ian
Spearing, Nigel	Wright, Sheila
Spriggs, Leslie	Young, David (Bolton E)
Stallard, A. W.
Stewart, Rt Hon D. (W Isles)	Tellers for the Noes:
Stoddart, David	Mr. Allen McKay and
Strang, Gavin	Mr. Lawrence Cunliffe.
Straw, Jack

Question accordingly agreed to.

MR. SPEAKER

forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House recognises the serious problems facing the United Kingdom shipbuilding and ship repair industries; welcomes Her Majesty's Government's measures to sustain these industries and to encourage them to compete effectively in international markets; and condemns the Opposition's policies as entirely unrealistic and likely to undermine the long term objective of securing soundly based United Kingdom shipbuilding and ship repair industries.