§ The Minister of State, Department of Trade and Industry (Mr. Norman Lamont)
I beg to move,That the draft British Shipbuilders Borrowing Powers (Increase of Limit) Order 1983, which was laid before this House on 22nd June, be approved.Under section 11 of the Aircraft and Shipbuilding Industries Act 1977, as amended by subsequent legislation, the borrowing limit of British Shipbuilders is set at £700 million. The cumulative amount of BS's borrowing that counts against this limit stands at £613 million. There is provision to increase the borrowing limit by order, subject to the approval of the House. I propose that the borrowing limit should now be increased to £800 million. This increase in the borrowing limit reflects BS's current and planned borrowing needs. The timing of this proposed increase is in line with the view we took of BS's borrowing needs when we last raised the borrowing limit. If the House approves this proposal, the provision in current legislation for BS's borrowing limits to be increased will be exhausted. The Government will be bringing forward legislation next Session to increase the borrowing limit further.
As hon. Members will be aware, the borrowing limit of BS was raised several times by the previous Government. The original level written into the [977 Act was £200 million. The increases in the borrowing of BS reflect the Government's continuing financial support for the industry.
I have seen suggestions in the press, particularly the shipbuilding press, that the Government adopt a laissez-faire approach. One might say, "If only that were true " The charge could hardly be wider of the mark. The Government have been massively involved in the provision of support and in the attempts of BS to secure orders. We have also provided considerable support for the corporation's overall strategy.
Since 1979, BS has received nearly £750 million in support. Some of that assistance, for example the intervention fund — a form of support which is not matched in all the countries that compete with BS —does not count towards the BS borrowing limit. In recent years, support for jobs in the merchant shipbuilding division alone has amounted to about £7,000 per job. That level of support has enabled the industry to start to restructure and to re-equip. Capital investment in 1981–82 was double that of earlier years, and it increased again in 1982–83. Investment per man in BS is running at levels comparable with those in the Japanese shipbuilding industry.
All that adds up to massive support. Regrettably, it also reflects the poor results that the corporation has turned in over the years, although in fairness I should say that until the past year, the losses were on an improving trend.
The results for 1982–83 have not yet been published, but I must tell the House that they will not make good reading. There will be a substantial deterioration from last year's trading loss of £20 million. It is important that the House should understand that the deterioration is caused not so much by lack of orders as by losses incurred on orders already obtained.
Within the total loss, some parts of the corporation have not performed badly, but the scale of losses in other parts 131 is disturbing. I emphasise to the Opposition that I am not saying that it is necessarily the fault of the labour force or the trade unions; it is not my job to ascribe blame for poor performance.
I do not underestimate the problems facing BS. Many are fairly intractable. Putting new technology into practice and moving into offshore business have presented considerable problems for BS, but we have to ask whether we can afford to go on giving support to the industry on the present scale indefinitely.
In addition to the problem of losses on orders already obtained, there is a problem for the future. The market situation has deteriorated and BS faces depressed markets in nearly all its areas of business. On the merchant side, BS is, for the second time in its short life, facing a severe market recession. World new orders in 1982 fell by 20 per cent. and the corporation took the lowest level of new orders that it has ever recorded.
The outlook is very grim. It is aggravated by the huge surplus of ships that are laid up, and that are overhanging the market. At the end of 1982, around 80 million dead weight tonnes, equivalent to nearly 1,500 ships, was laid up. The position has worsened since.
British Shipbuilders' performance is dominated by its difficulties on the merchant side — which, understandably, is the focus of concern both publicly and in the House, but its difficulties on offshore work are almost as great. The offshore market has been fiat for several years.
The Government have taken measures to try to stimulate the market. Changes in the petroleum revenue tax regime were introduced in this year's Finance Act. Proposals on royalty relief are currently being discussed in a Committee of the House. These measures should at least do something to boost the market, but the full effect will take time to come through and, again, one cannot avoid the fact that there is a surplus of rig capacity overhanging the market.
Ship repair markets have also been much depressed this year. Post-Falklands refit work has helped some yards, both publicly and privately owned, but the market remains extremely tight.
§ Dr. David Clark (South Shields)
Will the Minister take this opportunity to state the Government's intention for the ship repairing capacity of British Shipbuilders? Does the Minister stand by his statement the other week in response to my question, when he said that it was doubtful whether British Shipbuilders should retain a ship repairing capacity?
§ Mr. Lamont
It is the view of the Government and of the corporation that the company should not remain in ship repairing in the long term. There is no doubt that there is too much capacity in ship repairing. There has to be reduction in it. I am afraid that there is no way of avoiding that.
I thought that the hon. Gentleman was going to refer to Readheads, our intention in that respect and whether there was a possibility of the workers' co-operative buying the yard. As I have said to the hon. Gentleman in answer to previous questions, the Government would look favourably on any proposition to buy from private interests, but there is the problem of the overhang of ship repair capacity. I understand that the general manager of the consortium, Mr. Richardson, and the board member 132 of British Shipbuilders, Mr. Hares, who deals with ship repair, met last Friday. They discussed the propositions and agreed to meet again as soon as possible. I very much hope that those discussions will lead to a resolution of the issue that will be satisfactory to all.
The problems are well known to hon. Members, many of whom take a close interest in the fortunes of the shipbuilding industry. They are painfully obvious to British Shipbuilders as it fights to get orders.
§ Mr. Roy Beggs (Antrim, East)
I recognise the need for increasing the limit of borrowing powers for British Shipbuilders, but will the Minister assure me that the order will not further disadvantage Harland and Wolff at Belfast, which should have been included in British Shipbuilders? Will the Minister assure me that all possible assistance is given to help finalise the Blue Star order for Harland and Wolff?
§ Mr. Lamont
It is not my purpose to talk about Harland and Wolff; as the hon. Gentleman knows, that is a matter for Ministers in the Northern Ireland Office. The order is not connected with Harland and Wolff. It is confined to British Shipbuilders. I shall draw what the hon. Gentleman said about the Blue Star order to the attention of my hon. Friend the Minister of State, Northern Ireland Office. Those matters are not within my control.
I have already referred to the recession in the world market. All west European shipbuilders are facing the same difficulties. There has been a spate of reports recently of closures and liquidations in west European shipyards. Competition from the far east is particularly fierce. The European shipbuilding industry must reorganise and restructure to meet the challenge of fierce competition from the far east and from newly industrialising countries. We have to find a European solution to the problems of shipbuilding—although, as I told the House on 19 April, the difficulties of getting an agreed EC line are very considerable.
All this adds up to a position of extreme seriousness for British Shipbuilders and, as hon. Members know, BS has asked the Government for special emergency help to get orders in the recession.
It is quite clear that the corporation's present difficulties are not a passing phase. The fiercely competitive markets that the corporation faces are not a temporary phenomenon. They are here to stay. Long-term problems need long-term solutions. We are not in the business of buying a short-term breathing space for BS. We must now consider the long-term future of the business.
BS has submitted a corporate plan, setting out its own views, and I have had a number of discussions with the chairman, Sir Robert Atkinson. The chairman-designate, Mr. Graham Day, who started as deputy chairman on 1 July, is also contributing to the development of a coherent, well-considered plan for the future development of BS.
It is important that our response should be in the context of an over-view of the business. Far too often in the past, we have rushed into short-term measures. We need to take a strategic look at the situation. We have a responsibility to the people inside and outside BS whose jobs depend on BS and to the taxpayer who has already put so much into this industry. We have to consider the corporation's future not in the short-term but in the long-term.
While plans for the future of the business are being formulated, I have told Sir Robert Atkinson that we are 133 prepared to give careful consideration to specific requests for help on a case-by-case basis, within the framework of our international obligations.
The Government have applied to the European Commission for approval to an interim extension of the intervention fund support until 31 October. The present intervention fund arrangements expire in mid-July.
I have discussed the workload with Sir Robert, and I am satisfied that the interim arrangements which I have described will provide adequate support for BS over the next few months, while we look at the business.
§ Mr. Robert C. Brown (Newcastle upon Tyne, North)
The Minister has been talking of the ling-term future of British Shipbuilders. Is it still the Government's intention to privatise warship building? If that is the case, will not the hon. Gentleman agree that there is no future for merchant shipbuilding at all?
§ Mr. Lamont
We have never made any secret of our view that BS's warship building is a prime candidate for privatisation, but I do not accept that that will mean the end of merchant shipbuilding or do enormous damage to merchant shipbuilding. Merchant shipbuilding has to be competitive on its own and to stand on its own feet. If merchant shipbuilding can only survive on the back of warship building, there is very little future for it.
The measures that I have announced do not mean that BS will suddenly take a spate of orders — order prospects, with without Government support, are thin—but I believe that these arrangements provide a framework within which BS can continue to compete for what orders there are.
Although BS's two most recent orders have come from Mexico and Ethiopia respectively, the United Kingdom fleet continues to be merchant shibuilding's best customer. In 1982, 56 per cent. of the additions to the United Kingdom fleet were built in the United Kingdom. That looks small compared to the 80 per cent. and 90 per cent. figures recorded for some other countries, as has been pointed out in the House many times, but the United Kingdom fleet is by far the largest of an EC country which also has a developed shipbuilding industry. At 32 million tonnes, the United Kingdom fleet is second in size only to that of Greece. It is three times as large as the German fleet, and twice the size of the French and Italian fleets. In straight tonnage terms, United Kingdom shipowners have been placing a considerable volume of orders in the United Kingdom.
The year ahead will, I regret, be one of unprecedented difficulty for BS. Sir Robert Atkinson has said that BS is fighting for its life and that the industry's survival is now in question. BS must improve its performance by improving its competitiveness. It cannot keep looking to the Government to buy it out of trouble. BS is living in a fiercely competitive world and it cannot be insulated from it. It must be fiercely competitive and if it cannot or will not respond to that challenge, it cannot continue to demand financial support at the cost of other industries.
I hope that at every level BS will make the commitment necessary to turn its fortunes round. In the meantime it will continue to need financial support. The Government have made it clear that, particularly on the merchant shipbuilding side, they will continue to support the industry because that is necessary. However, there are limits to the extent to which we can go. I ask the House to approve the order.
§ 12.1 am
§ Dr. John Cunningham (Copeland)
I thank the Minister for the way in which he introduced the order, which we shall support. It is a measure to bring extra financial support to BS, and, as I understand it, it will increase the borrowing powers to the absolute limit under the Act. As a result of this one stage, early in this new Parliament, if further financial assistance is required for BS it seems that new legislation will be likely.
However, we have several questions to ask about the need for the money and the purposes for which it will be used. The Minister has made a sombre speech about the current position and the future prospects of the industry. First, what will the money be used for? Will it go into investment or will it be used to run down the industry in some way? To what purpose will BS put the £100 million?
It is, as the Minister said, three months since the chairman of BS, Sir Robert Atkinson, asked the Government for emergency action to save the industry. It is about time that the Government came to a conclusion on the chairman's proposals. It is also incumbent upon the Government to announce those decisons while the House is sitting, given their importance to the United Kingdom generally and to Scotland, the north of England, Merseyside and Southampton in particular, and to shipbuilding as an employer.
The unions in BS largely support proposals for assistance made by the management of the corporation, but let us be in no doubt that the unions are equally firm in their rejection of enforced redundancies, further reduction in capacity in the industry, and the wage freeze that the management has urged them to accept. Those matters need early resolution if conflict in the industry is to be avoided. Those matters also hinge on the Government reaching a decision about the proposals put to them by the chairman.
The Minister mentioned the results for 1982–83, which sadly reverse the trend of an improving performance by the corporation. I hope that, as with the steel industry, no long-term decision about the future will be taken by the Government about the industry's capacity or its future on the basis of what may well be a short-term deterioration in its position. There has been a major slump in shipbuilding orders world-wide, but that has not stopped the Japanese or Koreans from filling their shipyards with orders, although the Japanese have accepted some reduction in capacity.
I press the Minister to make early decisions and remind him of the amendment that he moved to the motion that the Opposition tabled when we debated the industry's problems earlier in the year— That this Houserecognises the serious problems facing the United Kingdom shipbuilding and ship repair industries; welcomes Her Majesty's Government's measures to sustain those industries and to encourage them to compete effectively in international markets" —[Official Report, 19 April 1983; Vol. 41, c. 218.]The Government's policies do not appear to be sustaining the industry at all. That is part of the problem. It is a question not just of financial support, but of support for obtaining orders in the United Kingdom and of Government policies to try to maximise the placing of orders by British firms in British shipyards. It is also a question of ensuring that public sector orders, paid for by the British taxpayer, come to British yards, unlike the 135 CEGB order which went to a Korean shipyard a few months ago. I urge those crucial policies on the Government.
The Minister of State said that a long-term solution to the industry's problems must be found. At this rate, there will be no industry. The industry is going down rapidly. If it does not survive, it will have died of Government neglect. The Secretary of State shakes his head, but the Government have been responsible for British Shipbuilders for over four years. We are not talking about a new Administration not having had time to grasp the problems. Throwing money at problems is not enough. How often has that been said by Tory Members? The industry needs much more than that.
In response to my hon. Friend the Member for Newcastle upon Tyne, North (Mr. Brown), the Minister refused to rule out privatisation. To talk about selling off profitable parts of an industry in the middle of a deep, world-wide crisis is like playing monopoly with the nation's industrial assets. It is like saying, "We are in trouble. Let's sell a little bit here and flog an asset or two there to pay the bills and get us out of the difficulties." Neither the Opposition nor the trade unions will support such a policy. Indeed, the Government can expect violent opposition to any proposals to dismember the corporation. That applies particularly to the ship repair sector which seems to be moving into a better phase in performance.
What do the Government intend to do about the Sir Tristram, which is anchored in the Tyne where its damaged superstructure is being cut away? Is that vessel to be repaired on Tyneside? May we have assurances about that specific case, because it is important to the people of South Shields which already has massive and mounting unemployment?
In the last debate the Minister talked about the need for action against Korea and Japan. What action has been taken by the EC in respect of those countries and what are the results? We hear talk about tackling the Japanese and the industrial operators of the far east. We have heard such talk before, and little, if anything, changes. As the United Kingdom accounts for only 3 per cent. of the world's shipbuilding capacity, it will make not an iota of difference to over capacity in the world if there are further closures in this country. It will, however, make a great difference to our long-term capability as a shipbuilding nation. As a maritime nation, we are pre-eminent in that respect among the nations of the EC and western Europe. Is not that the best argument of all for ensuring that our shipbuilding capability is sustained over a very long period?
I shall be brief, because many of my hon. Friends want to participate in the debate. Communities such as the Clyde, Tyne and Wear and Merseyside, where many thousands of families depend for their livelihood on the shipbuilding and ship repairing and associated engineering industries, will be at risk if no urgent decisions are reached by the Government. In Tyne and Wear, yet another 1,500 redundancies—
§ Dr. Cunningham
My hon. Friend corrects me. A further 1,800 redundancies are being sought by August. That region has the highest unemployment level in the United Kingdom, with the exception of Northern Ireland. 136 In the Strathlyde region 21,000 people are employed in shipbuilding and marine engineering, and many more in associated servicing industries. West central Scotland is another area of massive unemployment.
My right hon. Friend the Member for Glasgow, Govan (Mr. Millan) is here to represent Scottish interests. What name can be more synonymous with shipbuilding than Govan? Neither we nor the trade unions can accept further massive unemployment in those areas. There is also Cammell Laird on Merseyside — another area of unacceptably high unemployment.
The Minister of State mentioned Britain's shipping fleet. He had nothing to say about the exchange of correspondence between the Prime Minister and Jim Slater of the National Union of Seamen about the future of Britain's fleet. The Prime Minister gave that industry no guarantees, and little comfort, about the Government's attitude to its survival. There is a massive and continuing decline in our merchant fleet, which is crucial to us in times not only of peace but of war, as we saw in the Falklands war. Britain's historic strength has been mirrored by our maritime capability, both merchant and military, and that is a lesson that Conservative Governments should not forget.
The shipbuilding industry is being forced to contract by the Government's attitude and lack of policy initiatives for its survival. It is no wonder that men are volunteering to leave the industry. They are disillusioned and fed up with the uncertainty. They believe that the industry is dying from neglect and indifference.
The Conservative Government, during their period of office, have provided money to support the shipbuilding industry, but they have taken no major policy initiative to correct the situation, apart from legislating to privatise the industry. The Government's rejection of an industrial strategy for shipbuilding has immeasurably worsened the plight of British shipbuilding in the worst international recession since the 1930s.
We believe that a plan for the industry's survival is now urgent. It should not be necessary to demonstrate the logic and commercial importance of a home shipbuilding industry and of a vigorous shipping policy for an island nation that is dependent for 90 per cent. of its trade on ships, and for its very existence in time of war on naval and merchant shipping. Shrill cries about free competition and vigorous market forces do not come anywhere near meeting the essence of the issue. All our competitors, including the United States of America, engage in policies of subsidy of shipping as well as of shipbuilding. Without comparable and determined policies, the British merchant shipbuilding industry will disappear within this decade.
Surely, the appointment of a new chairman and chief executive at the enormous salary that Mr. Day is receiving must herald the agreement by the Government of a new policy, wich will bring British orders to British shipyards and work to those highly skilled and dedicated shipyard communities throughout Britain. If that does not happen, the Government will be to blame.
§ Mr. Neville Trotter (Tynemouth)
A very grave situation certainly faces the whole shipbuilding industry not only in Britain but throughout the western world. One significant feature is that it does not seem to matter whether they are old yards that have had limited capital spending, or brand new yards in other countries, that have 137 been built in green field sites, because they face exactly the same problems as a result of the dramatic collapse of demand for every type of ship. We have seen nothing like it in the past 50 years. There is a lack of orders for every type of ship. In addition, there is competition from the very low-cost yards in the far east. It is no wonder that every hon. Member will express concern about the future of the industry.
I pay tribute to the way in which the Government have accepted the challenge. In the past four years they have put £750 million into the industry. They were right to do so and I congratulate them on that. However, we must look to the future, and there is a need now for some long-term plan for the industry. It will not be easy. Indeed it will be extremely difficult to arrive at such a plan, but it must be attempted. With the arrival of Mr. Graham Day in the very near future as the new chairman of BS, I should have thought that the time was ripe to face up to that task.
There is much uncertainty in the industry. There could not be anything else in the present world conditions. There is uncertainty in every shipyard in the world. I see no reason why merchant ship building cannot continue separately from warship building, but there is uncertainty about that and those who work in the yards need clarification in the near future. I do not see how we can continue to build merchant ships in any of the western countries without continued and very substantial Government financial support. All the western Governments must face that. I accept—as I believe do my hon. Friends on the Front Bench—that this country must clearly continue to have a merchant ship building capacity. I think that that is accepted on both sides of the House. It must also be recognised that it will be at a cost to public funds for a long time ahead until the fundamental imbalance in world shipbuilding changes.
The size of the British industry will depend, as it has in the past, not only on public money but on the productivity of those engaged at all levels of the industry. I was concerned to read some comments by the present chairman of BS, Sir Robert Atkinson, about the need for dramatic changes in productivity. He referred to the productivity gap being overwhelmingly large. That is an unfortunate factor in the equation.
There is some good news—although not much—about shipbuilding in Britain. Under Sir Robert Atkinson's leadership, there has been a dramatic move towards the greater use of computers. BS is now leading the world, I believe, in that direction. He is to be congratulated on the way in which he took the lead in bringing that about. The new designs, if only we could find orders for them, are world beaters. The new ships with their lower manning and fuel efficient engines will have a market when the world economy picks up. It is important that all those in the industry understand the need to increase productivity, although I understand the difficulty of doing that at a time of world depression.
We cannot match the Koreans and other far eastern yards, but we can match the other western European yards. There is no reason why we should not set that as our target. We cannot hope to match the low-cost yards in Korea, or, in future, China. After I first visited Korea in 1976 I warned the House that it would become a formidable competitor, but at that time all attention was focused on Japan. Now everyone is aware of what is happening in 138 Korea, where costs are a fraction of those in the west. In another 10 years, the same will happen with China. It will move into the shipbuilding industry in a big way.
§ Mr. Frank Field (Birkenhead)
The hon. Gentleman said earlier that there was a need for a long-term plan for the industry. Will he comment further on that?
§ Mr. Trotter
I said that with a new chairman it was time for the industry to produce its long-term plan. When it is produced, no doubt the Government will consider it and present their findings to the House. We can then debate the plan. I hope that that will be in the near future.
§ Mr. Trotter
There are three factors. The first is the need for increased productivity, the second the need for the right designs and the third the need for continuing public support. I see no alternative to those. Then we can argue about how large the industry should be. I do not know what the new chairman's views will be, but I expect that he might put a series of alternatives to the Government. That is what I would do. It will then be for the Government and the House to decide upon the action to be taken.
We must not write off the industry. I do not think that any hon. Member does so. The British people and all hon. Members believe that there is a need for merchant ship building to continue. That is one of the messages that must come out of this debate.
§ Mr. Robert C. Brown
Many of the hon. Gentleman's constituents work at Swan. Hunter. Does he support the Government's intention to privatise naval shipbuilding? If so, does not he agree that Swan, Hunter cannot survive without naval orders?
§ Mr. Trotter
I do not accept the logic of the hon. Gentleman's remark. Swan, Hunter is not a pure warship builder— it is half warship builder and half merchant builder. That presents a category of its own. I do not think that another major yard comes into that category. There should be no problem. I want Swan, Hunter to be able to compete in building complex ships. Without going over too many old arguments, I was disappointed that the Tyne did not build the liner for P and 0. It was an ideal ship to be built on the Tyne. Its predecessor for the Norwegian line was built there successfully. Swan, Hunter's great expertise in warship building should equip it well to build the difficult merchant ships, not the simple ships that the Koreans can build with their cheap labour. That is the future for Swan, Hunter. I do not think that privatisation will affect that. If the hon. Gentleman asks whether people will buy yards that need the continuing support of public money, my view is that they will not.
The message tonight must be that there is a future for merchant shipbuilding in this country. The problems are great, but the size of the industry in part depends on its efficiency and the efforts of those in it, as well as upon continued support from the Government.
§ Mr. Nicholas Brown (Newcastle upon Tyne. East)
Thank you, Mr. Deputy Speaker, for enabling me to make 139 my maiden speech in this shipbuilding debate. My constituency is a shipbuilding community. It used to be a thriving shipbuilding community. I understand that it is a tradition of the House that maiden speeches should not be controversial but it is very difficult truly to represent a shipbuilding constituency and not be controversial.
In parts of Newcastle upon Tyne, East, male unemployment is over 40 per cent. In parts of the constituency, young people have lost hope of any real future, and it is sometimes reflected in their attitude to the rest of the community.
The average age of my constituents has been increasing for some time, and elderly people in my shipbuilding community are worried. They worry about paying the electricity bill, about rising urban crime, about continued social service and health service provision, and about the loss of bus services. Tyne and Wear seems to be singled out for special cuts beyond those inflicted on other transport authorities. Elderly people worry about vandalism and would like to see a real commitment to a community police service. They worry about the houses they live in and they worry about the long waiting lists for sheltered housing.
Overshadowing my constituency is the threat of yet further job losses in the shipbuilding industry. Those who work in shipbuilding harbour three main fears. They fear that the Government seek to return to the era of casualisation for the work force. They fear a return to the days, which some of the older workers in the shipyards can remember, of standing on the gates to see whether there was work. It is totally unacceptable to them that there should be a return to those days. Already too many of my constituents have endured short-term contract work or nothing at all. At present it is "nothing at all" for most of the men who would like permanent work and are prepared to accept short-term contract work but cannot find anything.
Secondly, and worse, my constituents fear that merchant shipbuilding and ship repair may be lost to our community — indeed, to our nation— altogether. The decent hard-working people who look to the shipbuilding industry for their livelihood expect something better from the Government than the instruction to compete with South Korea. We do not want to compete with a police state, slave wages and rotten working conditions. We cannot and we shall not, and we expect the British Government to protect and preserve a merchant shipbuilding capacity for Britain. At the very least, the Government could show the same determination as other European states. What a wicked thing it was to invest our wealth and our knowledge in such a way that it added to the world overcapacity in shipbuilding and ship repair, distorted the South Korean economy and ensured the industrial enslavement of South Korean workers.
The third fear that my constituents have is that the construction of warships will be held back until parts of British Shipbuilders have been privatised, and that then the orders will be committed to the new private yards. I hope that that fear will not be substantiated, and that the Ministry of Defence will dispel our fears by committing now the two minesweepers allocated to Clelands, and not hold back until 1985. I endorse the appeal that Tyne and Wear county council has made today to that effect and hope that we shall get a positive response.
140 It is sometimes argued that new jobs will come to communities such as mine to replace the old. My constituents are asking, "If that is so, where are the new jobs?" They will not be found at Parsons, the large engineering works that, together with British Shipbuilders, dominates the employment profile of my constituency. They certainly will not be found at Dunlop, Walker, or the tar works, or Berger paints division in Newcastle upon Tyne, because they have all closed.
The only large employer that is preserving jobs in my constituency is the local authority, and all credit to the city council for that, but increasingly the cost is falling on the already overburdened local ratepayer as central Government withdraws from their commitments to the local community.
I understand that it is traditional to praise the beauty of one's constituency. Parts of my constituency are very attractive, but other parts of it are downright ugly. We cleared away many of the old slums and now we have to clear some of the new slums. Central Government must not be allowed to run away from their share of the responsibility for what happened in the recent past. Central Government have an obligation to help local authorities rebuild their housing stock to a decent standard.
As a city council, Newcastle prides itself on its education service, and it certainly spends its money on that service. When things go wrong, the local educational establishment is protective rather than energetic. A local inspector's report has severely criticised teaching standards in the Walker secondary school. I wish to make it clear that I will not have that issue hushed up.
I understand that it is traditional in a maiden speech to refer to one's predecessor. I cannot claim to have broken the mould of British politics, but I have scraped some of it off. I should like to pay tribute to my former Member of Parliament — I live in the constituency — whom I remember for his consistency, and for his loyalty to his party and to the supporters in his party. I remember him for his charming and kindly personal demeanour and for his willingness to accept—I too hold this view—that it is possible to hold different political views and still be a person of integrity. Although he was always a political opponent, I should like to pay this tribute to Sir William Elliott, the retiring Member for Newcastle upon Tyne, North and the retiring Member for the Sandyford ward of what is now Newcastle upon Tyne, East.
§ Mr. Don Dixon (Jarrow)
I should like first to congratulate my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Brown) on his maiden speech. My hon. Friend spoke of the problems in his constituency and of his relations with the former hon. Member for Newcastle upon Tyne, North, Sir William Elliott. My hon. Friend referred to the people standing around waiting for jobs. I stood in the Naval yard, which is in his constituency and I have experienced those problems. I know the sufferings of those men who stood in all types of weather, waiting for the foreman to come out on the platform and say which men he required for a particular day. I agree wholeheartedly with my hon. Friend that we will not go back to those days in the shipbuiding industry. The sooner the Minister gets that through his head the better, and the sooner Robert Atkinson and the rest of British Shipbuilders' board get that through their heads the better. Enough is enough.
141 We shall not vote against the order because, as I have said many times, nobody wants to shoot a one-legged Father Christmas. The men who work in the shipbuilding industry want to hear something positive from the Minister and the Government about their future. The Minister talks about investment in the industry but he starts from the wrong position. When the industry was in private hands, investment was deplorable. I worked in the industry when it was in private hands. A survey was carried out in 1970 on investment and assets per worker in the shipbuilding industry. In the British shipbuilding industry, assets per worker were £825; in West Germany the figure was more than £1,000; in Sweden, it was more than £1,200; in Italy, it was more than £1,800; in Japan, it was more than £2,800. Those are the conditions that prevail in private industry. When the Government are talking about investment they should start from there, and not from nationalisation.
The Minister posed a question. He asked whether we could carry on supporting the industry in the present way. The question that he should be asking is whether we can afford not to support the industry in that way. The answer is no. Everyone knows that we cannot afford to allow the British shipbuilding industry to go down.
We live on an island. My hon. Friend the Member for Copeland (Dr. Cunningham) pointed out that 90 per cent. of our trade by weight is carried by sea. Seven eighths of the world is covered by water. We require not the sort of nonsense we hear repeatedly from the Minister but a maritime policy. The Select Committee on Industry and Trade interviewed members of the British Shipbuilders' board, trade unionists and indeed the Minister himself. The committee recommended that Britain should have a maritime policy. It is imperative that we should have a maritime policy. The fact that the Minister is called the Secretary of State for Trade and Industry perhaps indicates that the Government intend to pursue such a policy. One hopes that is the case because such a policy is vital for our shipbuilding industry.
It is about time that British shipowners started building in British yards. When a question was asked in the European Parliament by the Member for South Tyne and Wear, Miss Joyce Quin, she was given the information that Belgian shipowners ordered 94.4 per cent. of ships in their own yards; that French owners ordered 91.8 per cent. in their yards; Italian owners, 99.4 per cent.; and United Kingdom owners, 47 per cent. It is time that our shipowners realised that we expect more from them when it comes to placing orders at home. Indeed, our owners have the worst record in Europe.
Let us consider the orders that have gone abroad since the Falklands dispute. The Atlantic Conveyor would not have been replaced in this country had it not been for public opinion and the patriotism of Lord Matthews; he must have read some of the articles in the Daily Express during the Falklands crisis. There should be an inquiry into why the Cunard Countess order went to Malta. If British Shipbuilders could not compete with Malta on that, we should know why because, frankly, I do not understand how that order came to leave this country.
The hon. Member for Tynemouth (Mr. Trotter) referred to the P and O liner, the order for which went to Finland. My right hon. Friend the Member for Salford, East (Mr. Orme) wrote to the Prime Minister asking why the order for that cruise liner—at £90 million, the largest order placed by P and O — went to Finland. The Prime 142 Minister replied that Swan, Hunter or Harland and Wolff did not get the order because they did not have the necessary finishing trades.
It was nonsense to suggest that the finishing trades were not available in the Tyne and Wear area or at Harland and Wolff when national newspapers announced that the chances of a steel worker getting a job in the Tyne and Wear area were 71 to one; a painter, plumber, electrician or joiner, 45 to one; and an unskilled worker, 371 to one. For the Prime Minister to suggest that there were not sufficient finishing tradesmen in the area to complete that order was criminal.
We have said time and again that since the Conservatives came to power, British Shipbuilders have not had a proper deal. Indeed, the Prime Minister has the shipbuilding board terrified to put in for some orders in case the board is accused of overspending. The cash limits imposed by the Government are holding British Shipbuilders back, but I must not go into that in detail because my hon. Friend the Member for Sunderland, North (Mr. Clay) and others wish to speak. Many Members who are involved in the shipbuilding industry know Mr. Ken Douglas, who runs Austin and Pickersgill Ltd. He is a well known and much respected figure in the industry. He is a good manager and is not a political animal. We hear constantly about competition, productivity and the open market but in an article that appeared in The Guardian Mr. Douglas wrote:We are not competing against the Japanese shipbuilder or the Japanese shipyard worker, or the German or the Belgian or the Dutch or anything else. We are competing as a Government with Government terms offered elsewhere and it is a purely political thing. If Japan is giving a 50 per cent. subsidy, half the price of the ship, what kind of productivity levels would we have to reach to compete with that? If our men built the ship for nothing, we still can't win.Every country is subsidising its shipbuilding industry, including our colleagues in the EC. Sir Robert Atkinson asked recently how long Britain would continue to fight to the Marquess of Queensberry rules when everyone else was indulging in all-in wrestling.
The sooner that the Government support the industry during the world recession and at this time of unfair competition the sooner there will be a future for the industry. Morale in the industry is low and the workers have no confidence in the Government. If the Government want the industry, they should recognise its present state for what it is. It is about time that they realised what has happened and acted accordingly. If we ever have another Falklands dispute, there will be no shipbuilding industry and no one will be available to get the task force ready. The Prime Minister will not be able to ride again on the popularity bandwagon that she has been on since last year. The Government must act positively and provide long-term assistance that will lift the morale of the industry and give our people some sort of future.
§ Mr. Bob Clay (Sunderland, North)
Thank you, Mr. Deputy Speaker, for allowing me this opportunity to address the House on the appalling problems that my constituency faces because of the Government's attitude to shipbuilding and other industries. It is an opportunity for me to talk about the reality that lies behind the regurgitation of statistics and the chatter and jocularity that 143 I have witnessed on the Government Benches over the past few weeks whenever we have discussed mass unemployment and the collapse of our traditional industries.
Before dealing with those matters, I wish to pay tribute to the previous Member for Sunderland, North, Fred Willey. I know that Fred would not wish me to use too many words in honouring tradition when the pressing task is to speak for the shipyard workers, miners, other workers, and the workless, of Sunderland, the people for whom he spoke for so long and so persistently. Fred came into the House at the time of the great 1945 Labour landslide. It is sad that he should have left at a time when the Government clearly intend to continue apace the destruction of so much of what the 1945 Government achieved, which was built upon by subsequent Labour Governments.
The most frequent comment made about Fred by so many friends and colleagues is that he was a man of the greatest courtesy and patience. It is idle to speculate on the degree to which his exceptional qualities would have been strained by what is now being perpetrated on the town which he represented for so long. I hope that he will understand if I fail from time to time to control my bitterness and anger to the same degree as he did at what is being done to my constituents.
I make no apology for referring to bitterness and anger. I can only hope that I shall find the means to communicate succinctly to the House the irrelevance to my constituency of the talk of economic recovery and, more importantly, the real threat to democracy that begins to emerge in areas that have been all but abandoned. As my hon. Friend the Member for Copeland (Dr. Cunningham) has already said, the order is hardly relevant or helpful to the problems facing British Shipbuilders. An increase in borrowing power does not assist in winning new orders in the face of ruthless and unfair competition from the Korean yards. An increase in the borrowing limits does not alter the pitifully small intervention fund and the inadequate proportion of it that is available to win orders. It does not present British Shipbuilders with any opportunity for substantial investment in the industry; it merely reflects the increased debt due to the absurd level of interest charges that our shipbuilders face compared with those in other European countries and Japan.
How I wish that we had been debating not a £100 million increase in borrowing limits but a £200 million emergency package of direct assistance to British Shipbuilders for the next year to help it to improve substantially the pay and conditions of a highly productive, hard-working underpaid work force, to enable BS to compete more effectively with its more heavily subsidised overseas counterparts. I wish, even more, that the Minister had made an announcement of immediate Government orders for our merchant yards—a scrap and build programme and proposals for tough and immediate action to force British shipowners to build in British yards as the Americans do with their industry.
I question seriously the likelihood of the Government taking any action against the shipowners who talk so loudly of patriotism in other quarters while they have their ships built and repaired anywhere but in Great Britain. They pay their political levy to the Tory party and appear to be getting good value for their money. The Government 144 remain inactive and allow them to wreck a major British industry in pursuit of nothing but profit in the cheap labour markets of the far east.
It is interesting to dwell for a moment on that political levy. British and Commonwealth Shipping Co. Ltd. paid £95,810 to the Conservative party in the 12 months up to August 1982. The entire political levy paid to the Labour party by trade unionists employed by British Shipbuilders is calculated to be about £37,800. It is less than the £40,000 donated by Trafalgar House, the owners of Cunard, to the Tory party in that year.
In the light of what is being done to shipbuilding, it is scandalous that the Secretary of State for Employment shold have come to the House last week with proposals intended to restrict the political levy paid to the Labour party while at the same time refusing blatantly to interfere with the political levy paid by companies to the Tory party.
Nor is it true, as the Secretary of State for Employment claimed last week, that shareholders do not complain about such payments. Tyne and Wear county council, distressed by the Government's cavalier attitude towards industry, has written, as administrator of a local government pension fund with investments in excess of £130 million, to every major company with whom it has money invested, asking why they have donated money to the Conservative party. Councillor Michael Campbell, the leader of Tyne and Wear county council, attended the annual general meeting of Trafalgar House to voice anxiety about Cunard's disgraceful attitude towards British Shipbuilders. I hope that hon. Members will pay close attention to such factors when considering the trade unions' political levy.
The meagre and utterly inadequate nature of tonight's order reflects the criminal philosophy followed by the Government. In my view — tonight's statement reinforces it — the Government's attitude, as other Opposition Members have suggested, is to let shipbuilding go under and to write it off. We are told continually by the Government that we cannot hang on to dying industries and that we must look towards small businesses, new technology and so forth. I shall show what utter and tragic nonsense that is in my constituency.
The borough of Sunderland already has 25,885 people unemployed. That is over 20 per cent. of the work force. In many areas of the borough, it is over 50 per cent. This month another 4,500 shool leavers will join the search for work. They will join the other 26,000 in competing for 52 vacancies. About 1,100 of the 1,800 redundancies referred to by my hon. Friend the Member for Copeland will take place on the river Wear. British Shipbuilders will then employ less than 6,000 on the Wear.
Two of the pits which, according to the report of the Monopolies and Mergers Commission, should be closed are within the Sunderland district and others nearby employ thousands of Sunderland's workers. The collapse of British Shipbuilders on the Wear, and the closure of the pits threatened by the hit list, which has been for so long denied but which is now so clearly confirmed, would lead to over 9,000 direct redundancies in those two companies in the borough of Sunderland. Allowing for the most sober estimates of the effect on companies and services directly and exclusively dependent on British Shipbuilders and the National Coal Board, we should face unemployment of 58,000–45 per cent. of the work force. That is before we take into account all the spin-off effects of such a collapse of work. How many fish and chip shops or 145 microchip shops, video pirates, second hand car dealers, information technology agencies and disinformation opinion pollsters will it take to replace even the tiniest fraction of those jobs in pits and shipyards?
On the river Wear, where once we built half the world's tonnage of shipping, the two British Shipbuilders subsidiaries, Sunderland Shipbuilders and Austin Pickersgill, have taken on the grand total of 10 apprentices each this year. What possible hope can we have for the future of all the skills and traditions for which Sunderland is known throughout the world, when, out of 4,500 school leavers, the town's biggest employer takes on only 10 apprentices?
The Prime Minister should remember the Austin Pickersgill yard—she has been there twice to perform the ceremony of launching a ship. On the second occasion, the entire work force chose to clock off and go home before the launch to demonstrate their contempt for her policies. On both occasions she praised the efficiency and speed of production methods in the yard and called it an example of the achievements of British enterprise. I wonder whether she would dare come back now and face that work force, which is facing 700 redundancies out of the 1,100 already mentioned, when her policies have led to such despair and demoralisation and when this example of successful enterprise takes 10 apprentices this year and faces 700 redundancies.
Last year, 522 young people applied for apprenticeships at Austin Pickersgill. This year, the applications have dropped by nearly half, to under 300. That is a measure of how the youth of our town is increasingly giving up. More and more see no point in the search for work, see no hope for the future and have sunk to the utmost apathy and general hostility to our society.
Among all the froth and petty point-proving analysis of the fate of all parties at the general election, the most important fact is the increase in those, particularly young people, who have no wish to vote. In areas in my constituency, they will not even answer the door to any party. They are drifting away from any interest in the democratic process. As their numbers increase, and their despair intensifies, their passivity will not continue. Increasingly, they will retaliate with nihilistic fury against the society that has imposed this misery upon them, and our speculations about the relative fortunes of one parliamentary party or another will be placed in a different perspective by their activity. Measures of the kind that we are considering will be exposed as not merely inadequate, but irrelevant.
§ Dr. David Clark (South Shields)
I pay tribute to the speech of my hon. Friend the Member for Sunderland, North (Mr. Clay). We listened with great interest to his predecessor speaking in shipbuilding debates, and we listened today to my hon. Friend with great interest as well. There was much sincerity in his speech, and I enjoyed the powerful way in which he marshalled and used his facts to good effect. He will make himself a great reputation in the House if he continues to put forward arguments in the way that he did, and he is to be congratulated on the meaningful way that he did so. I also pay tribute to my hon. Friend the Member for Newcastle upon Tyne. East (Mr. Brown), who made a deep impression on the House.
146 I do not want to detain the House for more than a few minutes. We are discussing an order that increases the financial aid to British Shipbuilders, and I wish to speak about its ship repairing facilities.
The Minister's intervention and remarks on this aspect of British Shipbuilders earlier caused me some concern.
I understood the Minister to say that there was probably too much ship repairing capacity in the United Kingdom and that he doubted whether there was a long-term future for BS in that business. I take it that he means that the ship repairing capacity of BS should be made redundant. The hon. Gentleman should tell us whether he believes that the Middle docks in my constituency, which were saved after a great fight only a short time ago, should be closed. That is a matter of great importance on the Tyne. If the Minister is saying that the docks should be closed, it would cause great sadness and bitterness in the area. It may be unpalatable, but we should like a frank answer from the hon. Gentleman.
The Minister mentioned Readhead shipyard. I understand that we are talking no longer about a workers' co-operative, but about a limited liability company in which most of the shareholders will be former workers in the yard. My comments are in line with what I said about the Middle docks. It would be lunacy to reopen a private yard to employ 70 people if that put at risk a state yard employing several hundred workers and the private Smith's ship repair yard across the river, which also has several hundred employees.
I speak with some trepidation, but I must be frank with the House and my constituents. It would be silly to sacrifice up to 600 jobs on the altar of 70 jobs Will the Minister make it clear that it is not the Government's policy to have the only repairing facilities on the Tyne catering only for small vessels and that the Middle docks and Smith's yard should be closed?
Ship repairing is an integral part of BS. It would be nonsense to close that facility.
§ Mr. Trotter
I am sure that Smith's will face any fair competition. The firm's main complaint in recent years is that more than £13 million of taxpayers' money has been used to keep open the state yards on the Tyne. I do not believe that Smith's feels that it would be put at risk if there were a change on the other side of the river.
§ Dr. Clark
I do not want to get involved in a long argument. I understand what the hon. Gentleman says, but fair competition means equal labour conditions. Smith's and the nationalised yard have minimum standards of labour conditions. As long as those are adhered to, there will be fair competition.
§ Dr. Norman A. Godman (Greenock and Port Glasgow)
I shall move north-westerly from the Tyne to the lower Clyde. I am pleased to have heard in the debate two maiden speeches of such high quality.
In my constituency, shipbuilding and marine engineering together still form the economic backbone of the community. We are pressed for time, so I shall merely ask the Minister three questions, two of which are of direct concern to those on the lower Clyde.
First, is it not possible to allow one of our shipbuilding yards engaged in offshore operations to build a semi-submersible rig on spec and to sell it while it is under construction?
147 Secondly, is it not possible to reduce to three months the lead in time from the commencement of the building of the first type 2400 conventional submarine and the subsequent order?
My third question, in the light of what has been said about Britain's shipowners placing many orders in foreign shipyards, is a direct quotation from the July edition of Shipping World and Shipbuilder:is it not time that British shipowners were somehow forced to assist the plight of the shipbuilders by placing a larger percentage of their orders with UK yards? After all, this system is what apparently makes the leading shipbuilding nations become leading shipbuilding nations.
§ 1.1 am
§ Dr. Cunningham
With the leave of the House. I would not want to let this occasion pass, without, on behalf of my right hon. Friends the Members for Glasgow, Govan (Mr. Millan) and Salford, East (Mr. Orme), congratulating our hon. Friends the Members for Newcastle upon Tyne, East (Mr. Brown) and Sunderland, North (Mr. Clay) on their maiden speeches. They both, in their differing styles, brought a force and clarity to their arguments on behalf of their constituents. I congratulate them both warmly. I know that we shall hear a lot more from both of them and that they will make a positive impact on discussions in the House, not restricted, as this one is, largely to the areas that they represent, but across the breadth of industrial and social policy. By coincidence, I am also proud, with them, to be a member of the General, Municipal Boilermakers and Allied Workers Trade Union, which represents the largest number of workers in the shipbuilding industry.
§ 1.2 am
§ Mr. Norman Lamont
I should like to join in the congratulations to the two hon. Members who made notable maiden speeches. The hon. Member for Newcastle upon Tyne, East (Mr. Brown), spoke movingly and with deep concern about high unemployment in his constituency and made it clear that he intended to be an effective and forceful representative. As the Minister responsible for shipbuilding, whatever disagreements we may have about shipbuilding policy, I am under no illusion about the deep problems of high unemployment in constituencies that for so long have been heavily dependent upon shipbuilding. What the hon. Gentleman said struck an echo with me. It was an extremely effective and persuasive speech.
The only point on which I have a slight quarrel with the hon. Gentleman was when he referred to Korea and said that we do not want to compete with a police state. We may or may not like the internal regime of South Korea, but we have no option but to compete with it. Korea is in the world market. We have to compete with it. It is among our fiercest competitors.
The hon. Member for Sunderland, North (Mr. Clay) also made a forceful speech. He paid a tribute to the previous Member, Fred Willey, who always attended these debates. He was very knowledgeable about the shipbuilding industry. His experience went back to the pre-war era. I remember that on the Shipbuilding Bill, in a scrap-and-build clause debate, Fred Willey dissented from other Opposition Members—he was a bit sceptical about scrap-and-build because his memory went right back 148 to scrap-and-build policy of the inter-war era. He spoke with great conviction and enormous knowledge that went back a long time. He is very much missed in shipbuilding debates by hon. Members on both sides of the House.
The hon. Member for Sunderland, North made an effective and forceful speech. He said that he hoped right hon. and hon. Members would forgive him if his bitterness occasionally spilled over. But he was a bit wrong in one of his continents. He said that the order did not make much difference because it was concerned only with commercial borrowing and was not giving assistance to BS. It merely let the corporation borrow money at usurious rates of interest.
Perhaps it is unfair to expect the hon. Gentleman to realise that, for statutory powers, public dividend capital counts as borrowing. The order allows more public dividend capital to be advanced to BS—unremunerated, unpaid back and with no interest. I am afraid that the hon. Gentleman is wide of the mark if he thinks that the order merely allows the corporation to borrow money from the commercial banking system. It allows the Government to advance more money to BS. That is what the order is about, and that is why I said it was an earnest of the Government's support for the industry and for BS. That may be why the hon. Member for Copeland (Dr. Cunningham) was a little muted in his criticism.
The hon. Member for Copeland struck a new note. Normally he says that the Government are not doing enough to support BS. Tonight we heard more of a republican tune, because he pointed out that we could not solve problems by chucking money at them. I agree, and, by putting it that way, the hon. Gentleman appears to recognise that the Government have provided a lot of support for BS. He asked what the money would be used for. It will be used partly for working capital and partly for capital investment. But it is substantial support for BS.
The hon. Member for South Shields (Dr. Clark) asked about Middle docks. There is no Government view about Middle docks. That is a matter for BS. The Government regard BS involvement in ship repairing as an activity that is eminently suitable for privatisation. There is considerable overcapacity in ship repair, and one of the most worrying features is the competition between the public and private sectors. So many private sector ship repair yards feel that they are up against unfair competition from BS.
The hon. Member for South Shields showed a slightly schizophrenic attitude. He became very indignant when I said that there was overcapacity in ship repair, yet he was rather against the Readhead's buy-out getting off the ground, because he felt that that would damage the existing state yards. He seems to recognise that there is overcapacity. He felt that if Readheads workers were able to buy the yard, that might add to the overcapacity or put back capacity that had already been taken out.
There is one great difference about the Readheads' buyout. Those people would be going into the market place and competing with their own money, without subsidy and without support from the taxpayer. That is why the idea of a co-operative taking over the Readhead's works is a good one and one which I hope the BS management will look at sympathetically. I have urged the corporation to do that. If those workers want to chance their arm and compete with their own money, they should be given every encouragement to do so. I hope that there will be a positive outcome to the discussions about Readhead's.
149 My hon. Friend the Member for Tynemouth (Mr. Trotter) talked about how we should approach the corporate plan and the long-term problems of BS. He was asked what would be his priorities for BS. He said that he would draw up the plan by putting the emphasis first on productivity and secondly on design. My hon. Friend was right. We have given tremendous support to BS. Of course there is not a free market in shipbuilding; nobody says there is. The Government have been involved in and supported BS but at the end of the day it is productivity and design that will make the difference between Britain and other countries and whether we really can meet the competition from the low cost countries.
§ Mr. Field
The Minister struck a sombre note in his speech earlier and said that the Government were waiting for BS to put forward its corporate plan. Can we take it from that that when the Government receive that plan they will bring one of its alternatives to the House, or will they put forward their own proposals for the long-term future of the industry, not those put forward by BS?
§ Mr. Lamont
We have already received the corporate plan from BS and we are discussing not one but several options. I shall obviously keep the House informed about that.
Competition from the far east has been mentioned, and one hon. Member mentioned the Cunard Countess. Although that was a controversial order, it seems to have been forgotten that although many said that the Maltese would not be able to do it, that they were being unrealistic and had somehow cheated and got the order under false pretences, the work was completed in the stipulated time of 42 days. There seems no doubt that they did a good job.
That has been the history of so many orders about which the House has become indignant, feeling that the orders should go to BS. We have simply not been able to compete on either delivery date or price. We heard much talk about how the Cunard Countess would never be completed on time by the Maltese, how BS was being realistic while the Maltese were not. The sad truth was that we could not be competitive on that order.
The hon. Member for Greenock and Port Glasgow (Dr. Godman) asked me whether—
§ It being one and a half hours after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 3 (Exempted Business).
§ Question agreed to.