HC Deb 23 February 1983 vol 37 cc979-84
Mr. R. C. Mitchell

I beg to move amendment No. 1, in page 1, line 21, at end insert: `and such other activities as may from time to time appear to them to be desirable and which can be carried out within their existing shipyards'. This is a simple amendment but one that may well be very important, given the present state of the shipbuilding industry and its likely state over the next few years. We all know the position. We are in a world recession and there is no demand for merchant ships. We are facing severe competition, particularly from far eastern yards in Korea and Taiwan. The order books for merchant shipping do not look hopeful. The Government's deflationary policy is making the recession worse, with the result that the outlook for British shipbuilding is worse than it might otherwise have been.

We have the same picture in naval shipbuilding because Government defence cuts will probably reduce the number of naval vessels ordered over the next few years. I hope that the Government will soon decide about the next type 22 frigate and that the order will be placed at Vosper Thornycroft. I understand that the decision will be made shortly.

The position would be no better if some of the more extreme policies advocated by some members of the Labour party were put into operation. If those in the Labour party who believe in a siege economy and massive import controls, which would lead to restrictions on exports, had their way, the result would be disastrous for shipping. The decrease in the amount of goods moving from one country to another would reduce the demand for shipping, and therefore for further shipbuilding.

Clause 1(3) states: British Shipbuilders shall have power to carry on the following activities, namely— (a) the design, development, production, sale, repair and maintenance of ships and slow speed diesel marine engines". I understand that in a court case one firm is claiming that British Shipbuilders is building engines, which it should not be under current legislation. The amendment would allow British Shipbuilders to extend its activities within its existing shipyards.

About three years ago I visited Lubeck, a north German shipyard which had no orders for ships for the next nine months. It could not get new ship orders but it did not sack all the work force. It got an order for two large mechanical diggers for Libya. Those diggers were being built in the shipyard by the yard's work force. That seemed to be an eminently sensible idea. As I understand it—if I am wrong the Minister will correct me when he replies—if British Shipbuilders wanted to do that it could not do so under the present legislation. It would be outside the permitted range of activities. If there is to be a reduction in demand for shipping, it seems a good idea that the shipyards should turn to other activities. That would be a far better solution than sacking the work force and seeing it dispersed. When the upturn in the economy arrives and the demand for shipping increases, it will be difficult to recover the work force if it has been dispersed.

The amendment provides more flexibility for British Shipbuilders to extend its building activities beyond ships and diesel marine engines. I am not arguing that these activities should involve manufacturing in factories. The amendment refers to activities which can be carried out within their existing shipyards. I see no reason why the Minister should oppose the amendment. The greater flexibility that it would provide for British Shipbuilders could be helpful over the next few difficult years.

Mr. Hill

I am pleased to follow the remarks of the hon. Member for Southampton, Itchen (Mr. Mitchell). The hon. Gentleman may have failed to notice that clause 1(3)(d) states that consent for any activity can be given by the Secretary of State. I can understand the hon. Gentleman's anxiety. There are perhpas three forces that have come together. The first is the privatisation of Associated British Ports with a successful 34 times over-subscribed share flotation, which will mean more activities within the Southampton port area.

The second force is the fact that the Chancellor of the Exchequer has set up a policy committee which is examining whether, in the national interest, certain ports and airports should be customs free. I understand from a whisper in the Lobby that the policy committee has come out with a firm recommendation that this would be in the national interest. We await with great eagerness the Chancellor's statement on Budget day.

Mr. Mike Thomas (Newcastle upon Tyne, East)

I wish to be clear what the hon. Gentleman is saying and to establish its relevance. Is he suggesting that it might be possible for British Shipbuilders, in the ground currently occupied by its shipyards, to establish free ports or duty-free zones?

Mr. Hill

I am not suggesting that. If, however, the hon. Gentleman waits—[Interruption.]. Impatience is always a virtue in a politician but, in this case, it is not merited. The policy committee may persuade the Chancellor to bring forward a policy for free ports.

The third force at work is the Bill now before the House. There is the need for British Shipbuilders to set up subsidiary companies that will eventually be placed either former owners or the market place. Within my area of Southampton, these three policies could come together.

The hon. Member for Itchen has not stated exactly what these other activities might be. He has mentioned two diggers that are being assembled. That would hardly seem sufficient work to obtain the Secretary of State's consent. It seems to me that if there were increased trade in Southampton due to the fact that the port is customs free, ship repairers, under the management of British Shipbuilders, could well turn to other activities. Although my hon. Friend the Minister will say that these matters are adequately covered under clause 1(3)(d), it seems to me that, if this is the case, he should dismiss the amendment. If they are not adequately covered, it appears to me that there would be no harm in adding the amendment to the clause.

6.45 pm
Mr. Mike Thomas

The real purpose of the Bill, demonstrated by the hon. Member for Southampton, Test (Mr. Hill), as the cloven hoof came out from under the cloak, is to facilitate the sale of parts of British Shipbuilders to the private sector. This will be possible only by assuring those parts of British Shipbuilders that there will be sufficient public work, principally from the Ministry of Defence, to ensure that they are profitable. Otherwise, no one in his right mind in the private sector would wish to purchase them.

It is interesting that the Government regard the Bill as very much a one-way street. There will be no problem in a private sector company engaged in a myriad of activities—mining of diamonds, mechanical engineering or whatever—purchasing what is currently a part of British Shipbuilders and adding shipbuilding to its range of activities when the Government finally move to breaking up the corporation and selling off the profitable bits. No one will then say that it is ultra vires for a firm currently involved in heavy engineering but not in shipbuilding to become involved in shipbuilding. That will presumably be advanced by the Government, if they are still surviving at that point, as a wonderful reason why this outfit is well fitted to add shipbuilding to its activities.

The amendment proposed by my hon. Friend the Member for Southampton, Itchen (Mr. Mitchell) represents a reasonable and modest extension of the possibilities for British Shipbuilders and makes it a two-way street. The hon. Member for Southampton, Test has already mentioned the provisions that exist within the Bill. I can, therefore, see no reason why the Government should not make this modest addition.

I speak as an hon. Member who has two shipyards in his constituency. The only achievement of this Government in shipbuilding has been thousands of redundancies. I am glad to see the hon. Member for Wallsend (Mr. Garrett), in whose constituency the other shipyard in the Swan Hunter group is located, nod in agreement. In my case, one of the two shipyards in the constituency has been put on a care and maintenance basis. That is the Government's achievement in shipbuilding on my patch on the Tyne. My hon. Friend the Member for Itchen will forgive me if I say, in this context, that the only part of his speech with which I disagreed was the direction in which any orders for type 22 frigates should go. No doubt all hon. Members have their views on that matter. Hon. Members from both sides of the House representing constituencies on the Clyde and elsewhere will have their views about where the orders should go.

One of the consequences of lack of work is that even with the redundancies already declared and those still to be declared, there are still men and women in British Shipbuilders' yards who have little work to do. One of the more pernicious aspects of the Government's general policy, reflected here in shipbuilding policy, is the way in which they seem to wish to keep men and women idle when there is work to be done. We see roads that are unrepaired, and houses that are unfit to live in and that need bathrooms, insulation, draught-proofing and repairs of various kinds. We see the crumbling fabric of our Health Service, where construction workers could readily be put to work. The Government's policy seems to be based on the premise that it is somehow virtuous to keep people idle when there is work to do.

I come to an example of that policy. If my hon. Friend's amendment were accepted, work could be created in the shipyards for the men and women who already work there, but who currently do not have enough work, and, as a result, have redundancy hanging over their heads. I see no reason why the amendment should be opposed. However seductive the speech that the Minister is about to make, may be, I doubt whether it will convince me that the amendment should not be accepted. If part of the Government's plans is that it will be legitimate for almost anyone who chooses to engage in a bit of shipbuilding and that that will be guaranteed to be profitable by Government orders, but that it will be illegal for British Shipbuilders to become involved in other activities, that will be wholly illogical and wholly improper. I hope, therefore, that the Minister will accept the amendment.

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

I hope that my hon. Friend the Member for Southampton, Test (Mr. Hill) will forgive me if I do not follow him down his beguiling path of free ports, privatisation, and the flotation of docks, all meeting in one. He will understand that I am not in a position to say anything about free ports today, although I want to say something later about one of his points.

I understand why the hon. Member for Southampton, Itchen (Mr. Mitchell) thinks that his amendment is an attractive proposition. He would argue that it gives flexibility to British Shipbuilders—something that we have said is one part and purpose of the Bill. However, for reasons that I shall explain—they are not quite as sinister as those attributed to us by the hon. Member for Newcastle upon Tyne, East (Mr. Thomas)—I am afraid that I shall have to recommend the House to reject the amendment, because of the regard and consideration that we must give to the private sector and the competition between the public and private sectors.

The hon. Gentleman's amendment is not quite as restrictive as he may think. It refers not to activities carried out in shipbuilding yards, but to activities that are capable of being carried out in British Shipbuilders' yards. I do not know whether the hon. Gentleman deliberately intended that, but I must stress that it means that activities could be carried on in new establishments, and British Shipbuilders would be able to create new establishments for the purposes of those activities. The amendment speaks of activities which can be carried out", and that is why I stick to what I have said.

Mr. Mike Thomas

Is the Minister saying that if the wording of the amendment were "such other activities as may from time to time appear to them to be desirable and which were to be carried out within their existing shipyards", it would be acceptable?

Mr. Lamont

The hon. Gentleman must not charge at everything. I was only trying to explain the exact meaning of the amendment, so that the House could be informed. It was an observation in passing. I did not say that it altered the merits or demerits of the amendment.

My hon. Friend the Member for Test was right when he said that British Shipbuilders can diversify and move into other areas, provided that it does so with the consent of the Secretary of State. In my view, that is the right balance and the right degree of freedom for British Shipbuilders.

The present circumstances of British Shipbuilders are not dissimilar from those of a company in the private sector. Companies are limited by their memoranda of association as to the activities in which they may engage. If they want to change those activties, they have to obtain the consent of 75 per cent. of the shareholders. That is not miles removed from the idea that British Shipbuilders, in order to diversify into another area, should get the consent of the Secretary of State.

Mr. R. C. Mitchell

Can the Minister give an under-taking that if British Shipbuilders were to approach him and ask to diversify, he would look at the matter very sympathetically?

Mr. Lamont

Of course, if British Shipbuilders comes to us with a proposition for diversifying, we shall look at it, but we would have to have regard to the effect on the private sector. The hon. Gentleman asks me whether I will look at the matter sympathetically. I can tell him that the British Steel Corporation has come to the Government on a number of occasions and asked to form a joint venture with the private sector. On occasions we have allowed that to happen. The British Steel Corporation—this is the point that my hon. Friend made—has been able to do that only because the statute governing British Steel has been altered in the same way as the statutes relating to British Shipbuilders are now being altered by the Bill. This Bill will have a little of the effect that the hon. Gentleman seeks.

Dr. J. Dickson Mabon

The Minister said that he would look sympathetically on such a proposition within the context of the present statute, as I understood him. Can he, off the cuff, give an example where either a previous Secretary of State or the present Secretary of State has assented to something of this nature from British Shipbuilders?

Mr. Lamont

No, we have not given such an assent during the lifetime of this Government, but I have told the House that there have been a number of occasions on which British Steel has formed joint companies with the private sector. One of the purposes of this Bill is to allow joint companies to be formed between British Shipbuilders and the private sector.

In asking British Shipbuilders to seek the approval of the Secretary of State if it wants to diversify on its own, I believe that we have got the balance about right. We have to have regard to the overlap between the public and private sectors. All nationalised industries are sources of complaint about unfair competition. On British Shipbuilders and British Steel we get continual allegations of unfair competition, taxpayers' money being used to subsidise prices, thus damaging employment in the private sector. I accept what the hon. Gentleman said about a firm in Germany that diversified to save jobs. That may be attractive, but it would not be so attractive if the effect were to displace jobs in the private sector. This is one of the criteria against which one should judge a proposition of this nature: what will the impact be on the private sector, and will it damage in any way employment or the health of companies in the private sector?

The hon. Member for Newcastle upon Tyne, East said that this was an unfair balance. The phrase he used was that this was a one-way street, because if the private sector wanted to move into competition with the public sector there would be no objection. He wanted to know why the public sector could not compete with the private sector. The cases are quite different. We have to have regard to the uses to which taxpayers' money is put and the effects of possible unfair competition.

Although I understand the motives of the hon. Member for Southampton Itchen, (Mr. Mitchell) in tabling the amendment, I regret that l must advise my hon. Friends to vote against it in the event of a Division.

7 pm

Mr. R. C. Mitchell

I am not happy with the Minister's reply but in view of certain assurances that he has given, and on the understanding that we may want to return to this matter after the Bill has been debated in the other place, I ask the leave of the House to withdraw the amendment.

Amendment, by leave, withdrawn.

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