§ 5 pm
§ The Under-Secretary of State for Defence Procurement (Mr. Ian Stewart)
With permission, Mr. Speaker, I should like to make a statement about the future of the dockyard in Gibraltar.
Following close consultation and detailed discussions between Her Majesty's Government and the Government of Gibraltar on the arrangements for the closure of the Royal Naval dockyard at Gibraltar, the establishment of a commercial ship repair yard to take its place and certain related matters, the Government of Gibraltar have agreed to recommend to the Gibraltar House of Assembly and fully to support the terms which have been agreed between us. The Chief Minister of Gibraltar is proposing a motion to this effect in the House of Assembly this afternoon.
The Royal Naval dockyard will now close by 31 December 1984, a year later than originally envisaged. To this end, a state of redundancy will be declared on 1 September 1983 in respect of the rundown of the Royal Naval dockyard. Individual redundancy notices will be issued thereafter as appropriate. Full redundancy payments will be made. It has been agreed with the Gibraltar Government that, following closure of the Royal Naval dockyard, the yard will re-open immediately as the Gibraltar Ship Repair Company, which will be a commercially managed enterprise with A. and P. Appledore International Ltd. acting as managers on behalf of the Gibraltar Government.
Associated with the closure of the Royal Naval dockyard and the establishment of a commercial yard, Her Majesty's Government have agreed on a number of measures of support for the Gibraltar economy. The land and assets for the commercial ship repair yard will be handed over free of charge to the Gibraltar Government. A total of up to £28 million will be provided to meet the initial cost of conversion, working capital, and operating losses, if any, in the first two years of commercial operation of the new yard. These funds will be committed only after satisfactory assurances have been obtained by the commercial operator from the work force on new working practices. Subject to those assurances, funds could be disbursed before closure of the naval dockyard. The flow of funds thereafter will depend on the maintenance of those working practices.
During the first three years of operation of the commercial yard, work will be provided by the Ministry of Defence on Royal Fleet Auxiliary vessels to the value of £14 million at current prices. Work will also be available on other Ministry of Defence vessels to an approximate value of £500,000 to £1 million per year. In addition, the Ministry of Defence is leasing accommodation to the Gibraltar Ship Repair Company for use by management staff so as not to throw an additional burden on to Gibraltar's scarce stock of housing.
Agreement has been reached on new arrangements for the transfer of surplus defence land to the Gibraltar Government. The Ministry of Defence has also undertaken to release to the Gibraltar Government a number of sites which will facilitate the development of tourist and commercial facilities on the Rock. Release will take place when present facilities on those sites have been reprovided elsewhere and when the Gibraltar Government are ready to proceed with development. In addition, the Ministry of 1213 Defence has agreed to review its long-term property requirements to see what other sites might be available in future for transfer to the Gibraltar Government.
If there are any future difficulties for the Gibraltar economy, Her Majesty's Government would be prepared, in line with the policy of supporting Gibraltar during the present border restrictions, to examine the whole economic and budgetary situation with a view to considering whether — and, if so, what — further measures of support might be necessary or justifiable in the circumstances of the time.
The closure of the Royal Naval dockyard at Gibraltar inevitably poses considerable problems of readjustment for those who work there and for the economy as a whole. Nevertheless, given the substantial measures of support that I have announced for the dockyard and for the broader development of the economy, I am confident that the establishment of a commercial yard will provide a real opportunity for Gibraltar and its people to create a viable and effective alternative.
§ Mr. A. E. P. Duffy (Sheffield, Attercliffe)
Gibraltar, like the United Kingdom, depends on its maritime links and trade for survival. Since the announcement in June 1981 of the intended closure of Her Majesty's dockyard, the need to revitalise Gibraltar's greatest asset—its port —has become glaringly apparent. Therefore, the House will show the greatest interest in any initiative that seeks to fill this unnatural gap in Gibraltar's economy.
Are the Gibraltar Government confident that the new ship repair company will succeed, as there have been repeated initiatives in the past to phase the local shipyard into Her Majesty's dockyard and its three dry docks? An added difficulty is the far-away anchorages since Spain reclaimed the use of the commercial anchorages adjacent to the existing shipyard.
Did full consultation take place with the relevant trade unions? What does the Minister mean by "new working practices"? Is it true that they include a no-strike clause? How far is the establishment of the new company consistent with the need of the Royal Navy and NATO to retain a major base, with full supply and support facilities to back up their fleets, at the entrance to the Mediterranean and the Atlantic approaches? How far does the success of the company depend on full implementation of the Lisbon agreement? Is the Minister sure that, unlike the Falklands dispute, no wrong signals will be sent to Madrid?
The Opposition are anxious that the new commercial shipyard should succeed. If we receive satisfactory replies from the Minister to our questions, especially on the new working practices, we might then welcome his proposal, albeit cautiously.
§ Mr. Stewart
No one can be absolutely sure whether the commercial dockyard will succeed because we all recognise the present difficulties of the shipping industry. However, we have guaranteed a substantial work load worth £14 million on Royal Fleet Auxiliary vessels in the next three years. That will give the new commercial dockyard a good start. With the money available for modernisation and the further support measures that I have announced, I think that the new commercial yard will have every opportunity of success.
As to rival anchorages and other facilities in the Spanish area, such stories have been around for a long time but 1214 nothing tangible has happened. It is important for the commercial future of the yard that new working practices are introduced to enable it to be fully competitive in the world markets. A no-strike clause may be included in the conditions put to the work force by the commercial operators. If so, I am sure that that would assist the future prospects of the yard and would be welcomed by Opposition as well as Conservative Members. The matters to be included in discussions on working practices, which will naturally include shift work and so on, will initially be the responsibility of A and P Appledore International.
I endorse the hon. Gentleman's comment about Gibraltar's importance to the Royal Navy. I emphasise that we shall maintain a fully operational naval base in Gibraltar as well as the dockyard in its new form. The naval base is of the greatest importance to the Royal Navy and our position in the NATO Alliance.
With regard to the Lisbon agreement, one of the reasons why we have felt it necessary to make extensive provision to assist the Government of Gibraltar is the adverse effect of the border restrictions on Gibraltar's economy. It will not be necessary for the Lisbon agreement to be ratified to give the new commercial yard every prospect of success. However, Gibraltar's status, and no doubt that of its shipyard, would be enhanced greatly if that agreement could be implemented without further delay.
As regards the signals that my statement might give to Madrid, I hope that the fact that the Government of Gibraltar and the United Kingdom Government have come to this constructive agreement will demonstrate our full commitment to Gibraltar's future along the lines of the close relationship that we have had for many years.
§ Mr. Duffy
Will the £14 million-worth of Royal Fleet Auxiliary orders be sent to Gibraltar at the expense of British yards, notably of Tyneside? Perhaps I can take the Minister up on his point about new working practices. Does he not think it disgraceful that a British Government should be party to setting up a new commercial company and, moreover, putting public money into it, when it will insist on a no-strike clause?
The Minister has been to Gibraltar and met the trade unions involved, as have I. Is he aware that such new working practices would be unacceptable to those trade unions?
§ Mr. Stewart
Unlike the hon. Gentleman, I see nothing disgraceful in introducing working practices that will contribute to the efficiency and therefore the competitive success of the commercial yard. Of course, the £14 million-worth of Royal Fleet Auxiliary work over three years will be undertaken in Gibraltar at the expense of British dockyards or British shipyards.
§ Mr. Stewart
If the hon. Gentleman will allow me, I shall endeavour to answer his question. As the hon. Gentleman knows, the allocation of Royal Fleet Auxiliary work is one of the marginal items between the United Kingdom naval dockyards and British shipyards. As work progresses and as time passes, it must be decided whether such work is placed with the dockyards, or with the shipyards or a mixture of the two. I regret the loss of £14 million of work of this type to Britain but the amount of 1215 work provided by the Ministry of Defence to United Kingdom dockyards amounts to between £400 million and £500 million a year. Work given to British Shipbuilders amounts to about £400 million a year, and is rising. Therefore, we are talking about only 1 per cent. of the total work.
§ Mr. Albert McQuarrie (Banff and Buchan)
I congratulate my hon. Friend and the Secretary of State on arriving at some conclusion about the commercialisation of the Gibraltar dockyard. It has been a sorry history ever since commercialisation was originally suggested, and it has caused a great deal of anxiety in Gibraltar.
I hope that the House of Assembly in Gibraltar will be able to approve the recommendations that the British Government and the Government of Gibraltar have made. However, I am slightly worried that allocation of the £28 million for working capital depends on the work force accepting new restrictions. I understand that those restrictions are concerned not so much with working practices as with parity. The work force in the dockyard has achieved parity, and I understand that the new operators intend to phase that out when they become the managing agent for the Gibraltar Government. I am deeply worried about that firm's ability to carry out the work.
Does my hon. Friend seriously envisage the labour force initially being 300-strong in 1984, rising to 700 after a few months and gradually increasing to 2,300, which is its present size? Does he have a guarantee from A and P Appledore International that that will happen? Shall we have another Bailey's of Malta whereby, at the end of the period of management, the firm packs its bags and walks out, leaving us high and dry? To the credit of the Government, there is a commitment to sustain the support if the commercialisation is found not to be viable.
§ Mr. Stewart
I am grateful to my hon. Friend for his general welcome for the proposals. There have been difficulties but I am glad that they have been resolved to the satisfaction of the Government and the Government of Gibraltar. Like my hon. Friend, I hope that the House of Assembly will, in its debate, endorse the proposals in this agreement.
Like the hon. Member for Sheffield, Attercliffe (Mr. Duffy), my hon. Friend mentioned new practices. I have already commented on them. Work in a commercial yard differs substantially from that in a naval base that is partly a naval base and partly a Ministry of Defence dockyard. In current conditions parity of employment terms is perfectly reasonable, but under an independent commercial operation, it is clear that the best thing would be to adopt whatever working practices give the best chance of success.
My hon. Friend also asked about the numbers employed. The commercial operators hope to be able to re-engage about 300 of the work force almost immediately after closure of the naval yard. That number will rise within a few months to about 700. Progress from that size depends on the yard's success in developing business. I emphasise that the amount of Royal Fleet Auxiliary refitting work that we have undertaken to provide the yard between 1984 and 1987 is substantial and will give the new yard every opportunity to develop successfully.
§ Mr. Tam Dalyell (Linlithgow)
As one of the representatives of the Forth valley, which includes Rosyth which is in the constituency of my hon. Friend the Member for Dunfermline, East (Mr. Brown), am I not justified in thinking that this package is extremely generous to the Gibraltarians? Perhaps I may ask a different type of question. Although this is the fag end of the session and the fag end of Question Time, is this not an extremely far-reaching decision? Have the Government thought fit to consult and conduct discussions with the democratic and Socialist Government of Spain, as these proposals involve our future relations with Spain? Have we had the courtesy or the wisdom to consult Spain about this matter?
§ Mr. Stewart
If the Spanish Government had had the courtesy to implement the Lisbon agreement, matters would have been quite different.
§ Mr. Robin Maxwell-Hyslop (Tiverton)
To what extent have the Government had discussions with Morocco about the fate of the Moroccan workers, without whom the economy of Gibraltar would have collapsed in the years following the closure of the frontier by Spain? My hon. Friend's statement went much wider than the dockyard, so I shall ask, as I have in the past, what responsibility the Government accept for the future of the Moroccan work force. One cannot expect the Gibraltar Government to focus their attention primarily on this matter. I do not know what form of social security there is in Morocco, but it would be a dishonourable day for Britain if we overlooked the interests of those people, without whom, I repeat, the economy of Gibraltar would undoubtedly have collapsed following the closure of the frontier. Does my hon. Friend accept that it was the wish of the Spanish Government that it should collapse, but that many Moroccan workers filled the gaps and enabled Gibraltar to survive?
§ Mr. Stewart
My hon. Friend raises an important matter. There is no doubt that the contribution of the Moroccan work force to the economy of Gibraltar, especially of the dockyard, has been much appreciated in Gibraltar in recent years since the closure of and restrictions on the border. However, it is not for the British Government to negotiate with the Moroccan Government about this. The Moroccan workers are engaged by the dockyard and will qualify for redundancy payments, which are generous, exactly similar to those for Gibraltarians.
§ Mr. Kevin McNamara (Kingston upon Hull, North)
May I return to the conditions of employment and the establishment of the new company and ask the Minister what discussions he has had with the trade unions on the Rock about this matter? Is the insistence on a no-strike clause a condition that must be fulfilled before any money is given to that company? If people must take employment under the condition of a no-strike clause, are they not in the same position as members of Solidarity and Lech Walesa working in the shipyards in Gdansk? Do the Government wish to create that position in Gibraltar? Do the introduction of shifts, the cutting of wages, no-strike clauses and no permanency of employment represent what the Government stand for in Gibraltar, which has served Britain well, especially during the Falklands dispute?
§ Mr. Stewart
That is not what the Government want, and it is not the likely outcome of our proposals. The hon. 1217 Gentleman refers again to the no-strike clause and other conditions, but they are matters for the commercial operator and the work force to discuss in due time. The Government wish the yard to be viable and successful, and the proposals provide the best chance of that happening.
§ Mr. Paddy Ashdown (Yeovil)
As considerable anxiety is now being expressed in all quarters that the number of escort vessels available to the Royal Navy's operational fleet in the middle of this decade is liable to fall significantly below that which is required to fulfil our NATO and worldwide commitments, how will the closure of the dockyard affect the operational availability of Royal Naval ships, especially escort ships?
§ Mr. Stewart
I do not accept the hon. Gentleman's point, which he has made before, about the number of destroyers and frigates in the coming years. The closure of the naval dockyard will have no effect on the availability of such ships because the present Gibraltar dockyard is not equipped to refit a modern warship.
§ Mr. Gordon Brown (Dunfermline, East)
Will the Minister guarantee that no jobs will be lost at Rosyth dockyard in the refitting of Royal Fleet Auxiliary or other vessels? Is he aware that Rosyth is in a constituency parts of which have some of the worst unemployment rates in Europe?
§ Mr. Stewart
I am fully aware of the position at Rosyth. What happens to the work force there will depend upon many factors apart from what I announced today. I repeat that the amount of work involved, on an annual basis for a limited period of three years, represents no more than 1 per cent. of the work given to United Kingdom dockyards by the Ministry of Defence. To put the matter into context, we must accept that the dockyard is central to Gibraltar's economy. It has had major problems in recent years as a result of the closure of the border and subsequent restrictions, so the work that we are now offering is appropriate in the circumstances.
§ Mr. David Young (Bolton, South-East)
Is the Minister saying that, in negotiating this agreement, no discussions have been held with the trade unions? If such discussions have been held, will the Minister outline their outcome? If no discussions have taken place, is he prepared to come back to the House when they have?
§ Mr. Stewart
I shall give no such undertaking. I repeat yet again for those who find it hard to understand that it is a matter for the commercial operator to discuss and to negotiate with the prospective work force of the commercial dockyard what working practices will be necessary and acceptable for the satisfactory operation of the yard.
§ Mr. Greville Janner (Leicester, West)
Does that mean that the Minister will give no assurance to the work force that the Government will protect it by ensuring proper working conditions after the yard has been taken over? What assurances, if any, have the Government given to the Gibraltar Government, to the work force and to anyone else, and what will happen after 1987?
§ Mr. Stewart
It is not for the Government to give such assurances. We are playing a full part in providing a substantial range of measures of assistance to the Gibraltar 1218 Government to establish what we all hope will be a successful yard. I have already said that there will be a large work load, not only of Royal Fleet Auxiliary vessels, but continuing work on Royal Maritime Auxiliary craft, and I am confident that the new commercial managers can take advantage of the opportunities for developing a successful business that I hope will provide more work in the years ahead and, no doubt, better conditions as a result.
§ Mr. Gregor MacKenzie (Glasgow, Rutherglen)
Is the Minister aware that although we welcome cautiously any initiative to help the Gibraltarians, we are nevertheless concerned about the future of the work force in the dockyard? Those workers made a considerable contribution during the crisis in the south Atlantic, and we look to the Minister to ensure that their future is protected in every possible way. I suggest to the Minister, whose Department is possessed of large tracts of land in Gibraltar, that it would be sensible to hand them over to Gibraltarians to be used for other purposes.
§ Mr. Stewart
I thank the right hon. Gentleman for his general welcome. I also add a word of gratitude for the success with which the SS Uganda refit was completed at Gibraltar last year. The right hon. Gentleman's concern about the work force is perfectly proper, but I must tell him that the best way to provide a long-term future for the work force of that dockyard is not to run on and run down a naval dockyard that the Ministry of Defence no longer needs, but to provide the conditions in which a commercial yard has every prospect of success. The extent of the measures that I announced today demonstrates how concerned and committed the Government are to providing for the future of those who work in Gibraltar. Some Labour Members have even complained that too much work has been offered to sustain the yard in the coming years.
The right hon. Gentleman mentioned large tracts of land. I announced in my statement that some important sites will be made available to the Government of Gibraltar so that they can take other steps to develop and diversify the Gibraltar economy while the major change in the dockyard is taking place. Those sites include the important Queensway area, which runs between the town and the harbour, and some of the coastal area in the region of Rosia Bay. The Government of Gibraltar regarded those sites as most important for their purposes. We are therefore making early arrangements to permit transfer of those sites as soon as we are able to reprovide the facilities and as soon as there are firm plans for development. This will be an important factor in the development of the Gibraltar economy, not only in the dockyard but in other ways.
§ Mr. Duffy
The Minister seems intent on getting the worst of both worlds. He will undoubtedly have outraged trade union opinion in Gibraltar, as my right hon. Friend the Member for Glasgow, Rutherglen (Mr. MacKenzie) has just warned him. The Minister was in Gibraltar two or three weeks ago and must have met the trade unions concerned. Did he not intimate that there might well be some change in working practices, even if he was not more specific?
The hon. Gentleman keeps referring to the dockyard in relation to the refit of Royal Fleet Auxiliaries, but he must know that these are also refitted in commercial yards. If he cannot give an assurance on behalf of Rosyth dockyard, 1219 will he assure us that no jobs will be shed in any British commercial yard through loss of the refit of an RFA as a result of this statement?
§ Mr. Stewart
As I have explained, the allocation of Royal Fleet Auxiliaries is done as the need arises from month to month and year to year. It is impossible to give assurances of the kind that the hon. Gentleman seeks. If he is honest with himself, he will realise that that is the case.
Of course the trade unions and members of the work force in Gibraltar have some idea of what may be involved in the changeover. One of the reasons for allowing a further period before closure of the naval yard was to allow for a process of readjustment. I absolutely confirm that in our view the best prospects for the new commercial yard will depend on working practices that are compatible with efficiency and success in a competitive world market.