Scott Lithgow Ltd.

HC Deb 09 February 1984 vol 53 cc1021-4 3.33 pm

Dr. Norman A. Godman (Greenock and Port Glasgow)

(by private notice) asked the Secretary of State for Trade and Industry whether he will make a statement about the announcement of a conditional agreement between British Shipbuilders and Trafalgar House concerning the terms for the acquisition by the latter of Scott Lithgow Ltd.

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

Yesterday the Government were informed that British Shipbuilders and Trafalgar House had reached a conditional agreement on the acquisition of Scott Lithgow. Negotiations are still under way. Final agreement requires Government approval. In the meantime, it is still open to other parties which have expressed interest also to pursue the matter with BS. The Government have of course been kept fully informed of the terms of the conditional arrangement between BS and Trafalgar House and we are currently examining these.

Dr. Godman

Will the Minister give an absolute guarantee that no private cosy deal will be closed between those two parties and that all serious bids from interested parties will be most carefully analysed before a deal is struck? May we have an assurance that, if needs must, he will use his statutory powers to obtain the best possible deal in terms of the interests of the management and work force at Scott Lithgow and, hence, the citizens of Greenock and Port Glasgow?

Mr. Lamont

I can assure the hon. Gentleman that no private deal has been done. I can also assure him that all serious bids will be considered. He asked whether we would use our statutory powers. I said in my reply that the agreement would require the Government's approval. I should have hoped that the hon. Gentleman would welcome the fact that there is interest in the Scott Lithgow yard. Only a few weeks ago it appeared almost inconceivable. It appeared that there was no hope. Now there is some hope.

Mr. Peter Shore (Bethnal Green and Stepney)

Will the Minister confirm that not only one company, Trafalgar House, but that Bechtel and Howard Doris have expressed serious interest in the prospect of taking over the Scott Lithgow yard? How can the Minister reconcile his statement that no deal has been done with Trafalgar House with Mr. Graham Day's statement, reported in today's Daily Telegraph as follows: We have a moral agreement with Trafalgar House but not yet a legal one".

That is an extraordinarily strong commitment which does not fit easily with an impartial examination of the rival merits of Bechtel and Howard Doris.

The House should know what kind of terms are being offered to Trafalgar House and why Trafalgar House is being given so favourable a green light for its approach when it has given no guarantee to maintain even half the labour force in employment or to continue the development of oil rigs at Scott Lithgow, and when there are very large property interests connected with Scott Lithgow outside its shipbuilding interests.

Mr. Lamont

I confirm that other parties are interested in Scott Lithgow, including Bechtel. I understand, too, that a representative of Howard Doris telephoned British Shipbuilders yesterday to express interest. These approaches will be considered. Whatever deal is reached will require Government approval, so we shall wish to examine it very carefully.

The right hon. Gentleman will appreciate that Trafalgar House came forward much earlier than the others. It is a long way ahead simply because it came forward with an early offer and started negotiating quickly. Redundancies at Scott Lithgow appeard to be imminent on a total scale and British Shipbuilders responded, quite rightly, by negotiating with Trafalgar House.

The right hon. Gentleman says that Trafalgar House has not given a commitment to maintain oil rig construction, but its interest is to continue to use the yard for offshore construction. Trafalgar House is not without experience in this area. Through its subsidiaries, it has interests in offshore industries and in building structures for the North sea. I emphasise that one of the matters that the Government and Britoil will want to examine is the technical competence of any firm that buys the yard and its ability to fulfil the terms of its contract.

Several Hon. Members

rose—

Mr. Speaker

Order. I understand the importance of this question, but business questions and a statement are to follow it, as well as a very important debate on the Maze prison. Therefore, I shall allow questions on Scott Lithgow to continue until a quarter to four.

Mr. Bill Walker (Tayside, North)

Is the Minister aware that the work force at Scott Lithgow, in a meeting with my hon. Friend the Member for Banff and Buchan (Mr. McQuarrie) and with me, said that it would welcome private sector involvement to maintain the yard's capability and especially its expertise? Does the Minister accept that the work force must be kept in the picture so that it may go along with its promises to my hon. Friend the Member for Banff and Buchan and myself?

Mr. Lamont

I am very encouraged to hear that. All who work at Scott Lithgow should be pleased that there is some prospect that the yard will continue in operation. I was, however, concerned to hear that a large number of people there walked out this morning because they did not approve of the deal. Everybody at the yard should welcome the fact that there is now hope of an agreement being concluded.

Mr. Bruce Millan (Glasgow, Govan)

Is it not clear that yesterday's announcement by Trafalgar House and British Shipbuilders was a deliberate attempt to keep any other bidders out of the market? Did not that take Ministers — at least the Secretary of State for Scotland — by surprise as no prior notification of the announcement had been given to them? Is not that an intolerable way to deal with an issue involving thousands of jobs and, directly or indirectly, Government money? Is the Minister aware that some of us are very sceptical about a long-term commitment to the yard by Trafalgar House?

Mr. Lamont

I do not think that the right hon. Gentleman's scepticism is well founded. In my view, BS was absolutely right to get on quickly with negotiations. The Opposition have constantly stressed that time is short and that we should get on and do something. Now they say that we are getting on with it too quickly.

Mr. Michael Hirst (Strathkelvin and Bearsden)

Will my hon. Friend assure the House that before approving any deal for the acquisition of Scott Lithgow he will ascertain that the bidder has adequate project management expertise to ensure that rig 202 is completed on time and the yard's commercial reputation thereby enhanced?

Mr. Lamont

My hon. Friend will be aware that for this or any other deal to go through the agreement of Britoil is necessary. Britoil is an interested party and it wishes to have its rig. It will therefore wish to be satisfied as to the technical competence of anyone taking over the yard—as, of course, will the Government.

Mr. Malcolm Bruce (Gordon)

Is not signing a conditional agreement in the past 24 hours when a new and serious bidder has recently emerged nothing short of a disgrace? If the chairman of BS is supposed to be acting under instructions from the Government, is it not disgraceful that such a deal should be signed without the knowledge of the Secretary of State for Scotland, and should not both be sacked?

Mr. Lamont

I find the hon. Gentleman's attitude utterly incomprehensible. He has been urging that something be done to provide work and hope for people at the yard. Trafalgar House was the first company to make an approach and it was seriously interested. It was absolutely right that BS should get on and negotiate as quickly as possible in an extremely urgent situation.

Mr. Barry Henderson (Fife, North-East)

Is my hon. Friend aware that his annoucement is a ray of light on a dark scene? Does he agree that anyone involved in these matters who is not prepared to take part in a constructive and positive approach to all the options now open would be selling Scotland short and would not be easily forgiven?

Mr. Lamont

I am grateful to my hon. Friend. As we saw earlier in questions on the economy and at Prime Minister's Question Time, however, for the Opposition good news is bad news.

Mr. Norman Buchan (Paisley, South)

Will the Minister answer this simple question? Was the Secretary of State for Scotland informed and was the Minister's own Department informed before the "moral agreement" took place? Secondly, what job content will be assured by Trafalgar House, as the work force and most people who know the industry believe that it will be the worst possible private deal in terms of employment?

Thirdly, why would the client—Britoil—still have preferred BS to do the job and why is every private firm falling over itself to do a job that the Government themselves were not prepared to undertake?

Mr. Lamont

On the first point, both my right hon. Friend and I were kept fully informed and were aware of the situation before the announcement was made. If the deal went through, Trafalgar House would hope to employ 2,000 at first, to be maintained if new work is found. Otherwise, the total would fall to a nucleus of 1,250 jobs. [Interruption.] The hon. Member for Paisley, South (Mr. Burham) may scoff, but that is a very significant improvement on what might have happened. Finally, Britoil might have been prepared to renegotiate but, as the hon. Gentleman well knows, BS did not judge that to be in its commercial interest.

Mr. Nicholas Fairbairn (Perth and Kinross)

Has my hon. Friend noted that the shop stewards at the yard, without knowing any of the details of the matter, unanimously rejected the offer by that company to save employment? Is it not absolutely, blindingly dumbfounding that when jobs are going to be saved, and Opposition Members plead for them, they immediately reject any attempt to do this?

Mr. Lamont

I very much hope that those who walked out this morning in protest against the proposals will think again. I am sure that, on reflection, they will not wish to do anything that might put off a buyer for the yard.

Mr. Donald Dewar (Glasgow, Garscadden)

Will the Minister accept that there has been widespread dismay in Scotland at the spectacle of Ministers who are apparently totally out of touch with reality and who are belatedly reacting to events? Of course, we welcome bids for Scott Lithgow, but we want to be sure that every conceivable bidder is given a fair chance. Will he bring it home in no uncertain terms to Mr. Graham Day that talking about moral obligations to the first bidder, the one that he appears to favour, is not a sensible way of encouraging the kind of deal that we want in the interests both of the country and of those who work in Greenock and Port Glasgow, and that will save the maximum number of jobs? Will he accept that 1,250 is a quite inadequate total to save from the catastrophic situation to which Government policy has contributed greatly? Will he now get in touch with Howard Doris and Bechtel directly and make it clear to them that, whatever they read of Mr. Day's attitude in the papers, any bid from them will be welcomed and seriously considered as an option?

Mr. Lamont

I am not sure who is out of touch with reality. Only a few days ago the hon. Gentleman was urging us to get on with it. He said that the situation demanded urgent action. Now he is saying that the Government ought to slow it down. The great danger is that, if we slow it down, we may end up with no deal at all. However, I give the hon. Gentleman the assurance that all bids will be considered.