British Shipbuilders

HC Deb 25 July 1984 vol 64 cc998-1010 4.16 pm

The Secretary of State for Trade and Industry (Mr. Norman Tebbit)

With permission I will make a statement about British Shipbuilders.

The corporation today published its annual report and accounts for 1983–84, and copies have been laid before the House. The corporation made a trading loss of £161 million, of which £75 million was contributed by Scott Lithgow, which is now in the private sector, following the successful rescue operation in March.

The chairman has stated, and I agree, that the corporation cannot accept a continuation of the past two years' performance. I welcome his assurance that policies have now been established to ensure that the principal losses should not be repeated. I also welcome the steps that the corporation has begun to take on the rationalisation and restructuring of its activities.

On 4 June, I received the corporation's proposed corporate plan for the period 1984–85 to 1987–88 and I am placing in the Library a version with commercially confidential information deleted. The Government endorse the corporation's primary aim of concentrating resources on a stable, cost-effective mainstream merchant shipbuilding business.

The corporation is well aware that the key to its future depends on improving the efficiency of production of merchant ships. It sees the primary need as being the concentration and integration of its production, service and administrative facilities to increase efficiency, flexibility and productivity. In all this a further key element will be the implementation of the flexible working practices agreed with the work force earlier this year.

The history of such attempts to save, let alone revitalise, merchant shipbuilding is not encouraging. The new programme is ambitious in its scope but it is essential, and it is supported by the Government. The corporation plans to be able to accept orders at a rate of up to 180,000 to 210,000 compensated gross registered tonnage a year. This contrasts with the 117,000 CGRT of orders won in 1983–84.

The House will appreciate that the corporation's ability to win orders at such a rate will depend on a number of factors. These include the state of the world market; the agreement of the European Commission to an enhanced rate of subsidy through the intervention fund; the size of that fund; the degree to which productivity is improved; and the extent to which competitiveness is increased.

The Government will take decisions on funding levels in the autumn in the light of the negotiations in Brussels. I have already warned the corporation that a tight financial regime will have to apply, and that funding levels will depend on the overall public expenditure position at the time.

In the light of our manifesto commitment to privatise a substantial part of British Shipbuilders, the Government have decided that British Shipbuilders should sell its warship building interests, making substantial progress towards privatisation by 31 March 1985 and completing it by 31 March 1986.

The corporation will also continue to dispose of other saleable assets. Accordingly, I have today asked the corporation to set in hand action to dispose of those parts of the corporation engaged mainly or wholly in warship building. To secure the maximum practical extent of fair competition we would prefer to see the yards sold separately or in small groups.

I have, however, also asked the corporation to set in hand contingency preparations for a flotation of the Stock Exchange of all or some of the companies in case individual sales may not be achieved. I believe that this will enable the corporation to pursue single-mindedly its aims for its merchant shipbuilding business and to take the steps to improve efficiency on which its long-term future depends, while providing an assured competitive warship building capability.

Mr. Peter Shore (Bethnal Green and Stepney)

The Secretary of State is again playing his practised role as the principal gravedigger of British industry. Can he at least assure the House that there are no matters of importance that he has deliberately excluded from his statement, such as he instructed Mr. Graham Day to withhold last week from the Select Committee? Is it not a fact that this new corporate plan for shipbuilding, based on 180,000 to 210,000 tonnes output per annum, is simply not sufficient to maintain British Shipbuilders at its present size? If that is so, how many more redundancies and closures are in prospect?

Does not the Secretary of State agree that the only time that British Shipbuilders has approached viability in the past six or seven years was in 1981–82, with an output of some 400,000 tonnes? What is the right hon. Gentleman doing to ensure that British shipowners—what is left of them—place a larger proportion of their orders for new vessels with British yards? Is it not a disgrace that in recent years, on a comparable basis, only 26 per cent. of British shipowners' new orders have been placed with British yeard, as compared with 87 per cent. of French shipowners placing orders in French yards, 97 per cent. of Belgium shipowners placing orders in Belgian yards and over 75 per cent. and 85 per cent. of Danish, Dutch and West German shipowners placing orders in their yards?

Does the Secretary of State know of any other country that gives so little support through its merchant marine to its own shipbuilding industry? How can any sense of security be left in British Shipbuilders when the Secretary of State intends to strip away, by the spring of 1986, the most profitable part of the industry, the warship yards? Will he at least list those yards that he classifies as being engaged mainly, as well as wholly, in warship building? Finally, can he assure the House that we shall have an early debate in the autumn, and with the interim strategy report before us, before final decisions are taken on the future level of financial support for the British shipbuilding industry?

Mr. Tebbit

I am sorry that the right hon. Gentleman has had to go through the old gravedigger routine. I must say, he seems to be doing another performance of Jorrocks to my gravedigger— [Hon. Members: "Yorick."] The right hon. Gentleman plays the role of Jorrocks very well, too. I must stress that I am not closing any yards or making any workers redundant.

Mr. Shore

Yes, the right hon. Gentleman is.

Mr. Tebbit

If the right hon. Gentleman could just manage to hold his tongue for a moment, it would help. If any yard closures or redundancies occur, it will be because our yards fail to compete effectively with other yards, despite the fact that, since 1979, British taxpayers have subsidised them to the tune of well over £1 billion. If British shipowners find that, despite that subsidy of well over £1 billion to British Shipbuilders, they still cannot obtain competitive quotations, the fault must lie at the door not of the Government or of British shipowners but of British Shipbuilders.

The right hon. Gentleman has rightly said that the warship builders have been profitable, but I notice that he takes the view that in removing them, we are damaging the merchant shipyards. Is he suggesting that the British defence budget should cross-subsidise the production Of merchant ships even more?

Mr. Shore

Yes.

Mr. Tebbit

I am glad that the right hon. Gentleman has made it plain that merchant shipbuilding should be subsidised by the defence budget. I do not recollect him taking that view when he was in government. He asked which yards I categorised as being mainly in warship building. The two yards concerned are Cammell Laird and Swan Hunter.

Sir David Price (Eastleigh)

Will my right hon. Friend confirm that it is his and British Shipbuilders' intention to attempt to sell off the warship building division yard by yard first and then, if that fails, to try to sell it as a whole? Will British Shipbuilders entertain the possibility of a management-employee takeover bid, as happened with the National Freight Corporation? Are my right hon. Friend and the board of British Shipbuilders seized of the need for speed, and of the fact that a delay would corrode the morale of the work force and of that of potential customers?

Mr. Tebbit

Yes, I can assure my hon. Friend that the intention is to seek to sell the warship builders yard by yard. The yards in question are Vickers in Barrow in Furness, Yarrow on the Clyde, Vosper Thornycroft at Southampton, Hall Russell at Aberdeen and Brooke Marine at Lowestoft, plus the mixed yards of Cammell Laird at Birkenhead and Swan Hunter on Tyneside. The preferred option is to sell those yards individually, or possibly in packages of two, or something of that kind. Of course, a buy-out by the management and work force would be more than welcome, provided that commercial offers were made. I certainly agree that there should be no unnecessary delay, and that is why I have given Mr. Day —and he has accepted—quite a tight schedule. I know that he will seek to carry out those sales as expeditiously as possible.

Sir Peter Mills (Torridge and Devon, West)

Will my right hon. Friend confirm that this will not include——

Hon. Members

Two Tories.

Mr. Speaker

I apologise to the House for having called two Conservative Members one after the other, but I shall make amends.

Sir Peter Mills

I should point out that there is shipbuilding in my constituency. Will my right hon. Friend confirm that Appledore Shipbuilders, which produces mixed types of ships, will not be included? It is a very small yard and if it was included it would have to be grouped with another yard in order to remain viable. That is an important point for the 300 or 400 workers there, and I should be grateful if my right hon. Friend would clarify the position.

Mr. Tebbit

My hon. Friend is quite correct. We do not classify Appledore as one of the mixed yards for this purpose. However, its future might well be better in the private than in the public sector. Should an opportunity arise for a transfer to the private sector, I hope that it would be taken advantage of.

Mr. Bruce Milian (Glasgow, Govan)

Is the right hon. Gentleman aware that he has today announced a prescription for further decline in an already shattered merchant shipbuilding sector? Is he aware that the targets for orders that he has announced are well below the present capacity of merchant shipbuilding and will inevitably involve further closures? Is he further aware that even those targets will not be achieved unless we can do better on the intervention fund side, remembering that the amount given to British Shipbuilders by way of intervention fund has gone down from £64 million in 1979–80 to only £13 million in 1983–84? Does he appreciate how essential it is that the level of intervention fund assistance should now be increased?

Mr. Tebbit

The output of British Shipbuilders last year was 210,000 tonnes, so talk of further massive cuts —when I have said that the ambition of the corporation will be to take orders in the 180,000-to-210,000 tonnes area—is quite wrong. Despite all the efforts of Mr. Day and his colleagues, they were able to take orders for only 117,000 tonnes last year. I am not sure whether the right hon. Gentleman feels that a subsidy of £1 billion in the last six years was the limiting factor or whether he thinks that some of the industrial disputes, such as those at Cammell Laird and Scott Lithgow, may have had something to do with it, too.

Mr. Paddy Ashdown (Yeovil)

Does the Secretary of State realise that many will regard his plans to privatise the warship yards as an act of grand folly on the scale of his plans to privatise the royal ordnance factories, from which he has suffered so much recently? Will he explain why the break-up of those yards will not result in the loss of those savings of scale which were achieved before? Is it not true that the cross-operating and cross-funding which was beneficial to the civil and military sectors will now vanish? How are we to go about the difficult, complicated and potentially expensive business of disengaging the military from the civilian sectors? Is the right hon. Gentleman aware that this seems to be yet another example of the Government's blind dogma acting against the best interests of the industry and the Royal Navy, which it serves?

Mr. Tebbit

The right hon. Gentleman is wrong on every point that he puts. He talks about benefits as though there were clear, assured benefits to be seen. The benefits have been that our warships have been so expensive that we have not been able to export any for many years. That is regrettable, not only because we have lost jobs that we need not have lost but because the Navy has paid more for its ships that it need have paid and has had fewer ships than it might have had, and those ships have been delivered later than need have been the case. Thus, I see no benefits there. I see no difficulty in disengaging the yards.

Mr. Robin Maxwell-Hyslop (Tiverton)

What restrictions, if any, is my right hon. Friend putting on British Shipbuilders in its disposal by way of giving interest-free loans, as happened in the case of Tyne Shiprepair, so enabling the new firm, once privatised, to undercut all firms already existing in the private sector? May we be assured that that will never be permitted to happen again?

Mr. Tebbit

We shall look at these matters case by case. I think it unlikely that any such deals will be arranged for the sale of the warship yards. The subsidy to Tyne Shiprepair did not begin at the time of privatisation. It had been subsidised to a large extent for a long time. The alternatives were to continue that subsidy, with damage to the private sector yards; to close the yard, with the loss of all the jobs; or to offer a degree of subsidy, through the finance which was offered, for a finite time during which the yard could seek to establish itself. I believe that the last course was right.

Mr. Don Dixon (Jarrow)

Is it not a fact that Mr. Day has secured no orders since being appointed chairman of British Shipbuilders because he has been too busy carrying out the Secretary of State's instructions to dismantle the British shipbuilding industry? It is nonsense to suggest that the taxpayer will be saved money by flogging off the warship yards, which last year made £44 million profit. The right hon. Gentleman is simply putting more money into some of his friends' pockets. Is it not also a fact that the sale of the warship yards will mean that merchant shipbuilding in Britain will not be viable? The right hon. Gentleman is carrying out the Government's policy towards public enterprise: if it is in the black, flog it back; if it is in the red, bleed it dead. Is the Secretary of State aware that this will be the only maritime nation in the world without a maritime policy, without a shipping industry and without any capacity to build the ships it needs?

Mr. Tebbit

The hon. Gentleman takes a slightly jaundiced view and goes over the top in some of what he says. The answer to his remarks about the privatisation of the warship yards is that, in my view, no harm will come from having warship building yards which are keenly competitive, both for MOD orders and for orders from overseas, and which are turned around in the way in which the private ownership of Scott Lithgow has already begun to turn that yard around. The hon. Gentleman takes a narrow and bigoted attitude towards these matters, if I may put it to him in such a kindly fashion.

Several Hon. Members

rose——

Mr. Speaker

Order. I remind the House that this is an important Back Bench day, with the Consolidated Fund Bill to follow. I propose to allow questions on this matter to continue for a further 15 minutes, and I hope that in that time all hon. Members who wish to put questions will be called.

Mr. Kenneth Warren (Hastings and Rye)

Will my right hon. Friend place any inhibition on foreign investment in the purchase of the warship yards? Will he give an assurance that, in consultation with the Secretary of State for Defence, the Trident contract will not be downgraded or degraded in any way and that it will not cost any more if it is passed through Vickers into private ownership?

Mr. Tebbit

In the event that I think it desirable, in the national interest, to place restrictions on foreign ownership or foreign part-ownership in any of these yards, I shall do so. The answer to my hon. Friend's question about the Trident programme is that the Secretary of State for Defence and I are both of the opinion that privatisation will help rather than hinder the taxpayer getting proper value for money. It will, at the same time, get rid of the peculiar system under which, as the right hon. Member for Bethnal Green and Stepney (Mr. Shore) would have it, the defence budget is called upon to subsidise merchant shipbuilding yards— [Interruption.] If that position has obtained up to date, I am surprised that Opposition Members have not been more keen on the Trident programme.

Mr. Bernard Conlan (Gateshead, East)

When the Secretary of State extols the virtues of competitiveness, is he incapable of understanding that to hive off the profitable elements, the warship yards, will make the industry less competitive? Is he aware, therefore, that his policy is not only self-defeating but patently daft?

Mr. Tebbit

Again, the hon. Gentleman has the wrong end of the stick. I assure him that the operations, for example, of Vickers do not gravely affect the competitiveness of Govan, and that Vosper Thornycroft's military building programme is not of crucial importance to Sunderland Shipbuilders. That is a fact of life. If the hon. Gentleman is muddled, I am sorry for him; he will have to get down to trying to understand the position.

Sir Peter Emery (Honiton)

Has my right hon. Friend noted that in their statement to him, the auditors have had to qualify the accounts by saying that they do not give a true and fair view of…the state of affairs of the Corporation…the loss of the Corporation and…the source and application of funds of the corporation? Is that not a most dramatic qualification for auditors to give on any accounts? How does my right hon. Friend interpret that? What, therefore, does he think the real loss would be so as to avoid that qualification? When or if the warship divisions have been sold, how much more public funds does he believe will be necessary for the merchant shipping division to break even?

Mr. Tebbit

I understand that the principal cause of the auditors' reservation was the Scott Lithgow accounts. The accounts of that subsidiary were not able to be presented in an audited form and there has been some discussion about that. I know that my hon. Friend will be looking forward to the opportunity to pursue these matters in more detail in another forum, where I understand the auditors will be able to explain in more detail their reservations. I hope that that will be helpful to my hon. Friend. Secondly, there is a need for greater skill in extracting the best from the investment that has already been made in the merchant shipbuilding yards rather than for large amounts of extra new investment.

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

Most observers will readily acknowledge that the centre of new shipbuilding activity will remain firmly in south-east Asia, with perhaps some developments in south American countries. Against that backcloth, which is, for western shipbuilding nations, unbeatable competition, I ask a question about the corporation's restructuring of its engine-building operations. Has Harland and Wolff addressed itself to the serious issue of over-capacity in engine building to the same extent that British Shipbuilders seems to have done in recent months? Is it feasible that the engine builders in Ulster and the engineering division of British Shipbuilders can come together in some form of partnership?

Mr. Tebbit

The hon. Gentleman is right to say that the super-competitiveness of yards in south-east Asia, but more especially in Korea and Japan, is a world problem. these yards have been taking a larger and larger share of the world market, which has been an extremely difficult one in recent years. That is why we have an intervention fund and subsidies, merely to maintain a shipbuilding industry in the face of that competition. I fully understand what the hon. Gentleman says about the difficult position of the engine-building sector. We would all welcome a rationalisation plan to ensure that both Harland and Wolff and British Shipbuilders arranged their affairs in a way that would be to their mutual benefit. There is still severe overcapacity in the United Kingdom.

Mr. Cecil Franks (Barrow and Furness)

Is my right hon. Friend aware that his statement will be warmly welcomed in Barrow, especially by the management of Vickers Shipbuilding and Engineering Limited, which looks to the future with great confidence? Will he take into account the unique nature of Vickers Shipbuilding and Engineering Limited in its part of the Trident programme and the large capital sums that are involved, not least the £250 million investment in the covered construction hall for the building of Trident? Will he take that into account specifically when determining the method to be followed for privatisation?

Mr. Tebbit

I am sure that my hon. Friend is right. I believe that there will be a great deal of support for privatisation on the part of the warship building yards. I do not think that they have had an especially happy life in British Shipbuilders and I think that many of them would like to return to the days when they were sufficiently competitive to export on quite a large scale. They were able to do so some years ago but not, unfortunately, in recent years. Exports are to the benefit of all those who work in the yards.

I understand my hon. Friend's concern about the large capital investment that will be required to ensure that the facilities are available for the building of Trident submarines. There are various ways in which that can be arranged. I can assure my hon. Friend that we shall ensure that that issue is taken care of in the sale.

Mr. Eddie Loydon (Liverpool, Garston)

Even if the right hon. Gentleman does not agree with the result, does he accept that industrial action in the shipyards arises from the insecurity that has attended the industry for many years? The major decline of the industry took place in the post-war period when it was in the hands of the private sector. What assurances can he give the House that there will not be a repeat performance when the industry is handed back to private enterprise?

Mr. Tebbit

I understand that the work force in the yards has had a feeling of great insecurity on many occasions. If that has led to industrial action, I am sure that the hon. Gentleman will agree with me that that was a misguided reaction. There is no doubt that industrial action has led to even greater insecurity, when customers who cannot get their ships delivered on time decide not to go back to British yards to order again.

The future of employment in the industry is governed principally by the level of world orders—over which, I must tell the hon. Gentleman, I do not have complete control. Secondly, it is governed by the competitiveness of our yards. What we can do by subsidy is small compared with the effects of those factors.

Mr. Christopher Chope (Southampton, lichen)

Will my right hon. Friend congratulate the employees of British Shipbuilders in Southampton on once again contributing a profit to BS? Is he able to confirm that it is the employees of the warship building yards who will be the principal beneficiaries of privatisation? They will benefit because they will no longer have the millstone of loss-making yards hanging around their necks and keeping down their pay.

Mr. Tebbit

I congratulate all those in British Shipbuilders who have been doing their best to eliminate losses or to increase profits. Those who have been behaving in that way have done the most that they can to ensure their jobs. My hon. Friend is right to talk about the extra freedom that will be given to the yards. It is much better when a work force knows that it is responsible for its survival and that it is competing for its jobs under fair conditions. I am sure that the work force in the yards will want to do that as keenly as it can, both at home and abroad.

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

Is the Secretary of State aware that, when he remonstrated with my right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore) for referring to him as the gravedigger of British industry, he was remonstrating about an understatement? My right hon. Friend should have referred to him as a funeral director—he looks like one, too—arranging for the funeral of British merchant shipbuilding. After 31 March 1986, when naval shipbuilding will be privatised, the rapid decline of British merchant shipbuilding will set in as surely as night follows day. It will be a terminal illness, thanks to the Secretary of State.

Mr. Tebbit

I thank the hon. Gentleman for his kind personal remarks.

Sir Kenneth Lewis (Stamford and Spalding)

Is my right hon. Friend aware that more years ago than I care to remember the industry was courageous enough to give me a job, which is more than my Front Bench has ever done? I managed to survive, so my right hon. Friend will not be surprised to hear me say that I care for the industry. We are an island nation and maritime matters continue to be important to us. If we privatise the warship sector of the industry, what will the Treasury be left with and how much will it cost to keep the rump going? Secondly, does he think that the moment is right for selling the shares on the Stock Exchange?

Mr. Tebbit

I am grateful to my recently ennobled hon. Friend for his reminiscences about his early days in shipbuilding. I am glad that he had a job in those days at least. It would cost no more to maintain the merchant shipbuilding yards as a separate operation than they cost at the moment within the totality of the present British shipbuilding operation. I understand what my hon. Friend says about the difficulty of selling on the stock exchange at the moment, but on the other hand I have made it clear that the yards are most likely to be sold by direct sale on an individual basis from next March, when I am sure that things will look much more cheerful in all manner of ways.

Mr. Ted Garrett (Wallsend)

The Secretary of State accused my hon. Friend the Member for Jarrow (Mr. Dixon) of being jaundiced and bigoted. In view of my hon. Friend's knowledgeable approach to the industry — no one here has a superior knowledge of that industry —were not those comments rather unfair and would not the right hon. Gentleman, on reflection, care to retract them? The area of Tyneside which I represent—Wallsend—has the biggest yard and the largest number of employees within British Shipbuilders. Would the right hon. Gentleman care to reconsider his decision about the Wallsend yard, which is a mixed yard specialising in merchant ships, warships and specialist vessels? If the yard is limited exclusively to warship building, a large area of land which could be used for building some of the largest ships in the world will not be put to full use. In the United Kingdom, Harland and Wolff is the only other yard which can build ships on that scale, now that the yards on Clydeside have virtually gone. Should not the Minister reconsider the possibilities involved in the reorganisation of the yard, and could he give us an early decision so that the people of Tyneside will not remain in a state of confusion?

Mr. Tebbit

I made no comment on the degree of knowledge of the hon. Member for Jarrow (Mr. Dixon). I do not wish to argue about the extent of his knowledge or information. However, I thought that he was rather narrow-minded about these matters.

I understand the hon. Gentleman's concern about Swan Hunter. This is a very difficult matter. My view—and, I believe, that of the management—is that the future of the yard would be best assured in warship building rather than as a mixed yard. I am sure that warship building will be the predominant feature, although to some extent the yard will look at other civil work on a minor scale. When one looks at the position in the United Kingdom as a whole, one wonders how many of the very large yards to which he has referred, such as Harland and Wolff and Swan Hunter, we can afford to maintain.

Mr. Gordon A. T. Bagier (Sunderland, South)

I fully understand the right hon. Gentleman's reasons for selling off the profitable warship section, but what did he mean when he referred in his statement to "other saleable assets"? Did he mean the other profitable sections of the British shipbuilding structure? If so, how does that leave the merchant shipbuilding sector? The right hon. Gentleman said that merchant shipbuilding must become more efficient and dedicated. Is he aware that the work force at Sunderland Shipbuilders are forgoing their annual holidays to launch a ship so that it can be delivered on time? Sunderland is one of the largest shipbuilding towns in Britain. Can the right hon. Gentleman tell me what will be the future for Austin and Pickersgill and Sunderland Shipbuilders under the statement that he has made today?

Mr. Tebbit

First, when I referred to other disposals, I was referring principally to the remaining ship repair businesses such as Falmouth, and businesses which are peripheral to the main business of the corporation.

I am glad to hear about the efforts made by the work force at Sunderland to launch their ship on time. Such an attitude is the best safeguard that they could conceivably have for their jobs. I join the hon. Gentleman in praising the attitude of the work force.

The yards in the north-east, including A and P, will be among those grouped together in one of the two main groupings of British Shipbuilders—those on the Clyde and those in the north-east—to try to strengthen their competitive capacity. I hope that A and P will have a future within the north-east group.

Mr. Teddy Taylor (Southend, East)

I was an employee of the shipyards on the Clyde in the days when they were profitable. In view of this depressing report, and in view of the auditors' qualifications, do the Government have a firm policy commitment to retain a merchant shipbuilding industry on strategic or other grounds, or is their survival a matter for themselves and their own efforts, together with the help which the Government provide?

Mr. Tebbit

We certainly want merchant shipbuilding to survive in this country, but the matter is not entirely in the hands of the Government. It is also in the hands of those who work in the industry. I hope that together we will be able to ensure the survival of the industry. However, there is nothing that the Government can do by way of subsidy to persuade people to buy ships unless they are of the requisite quality, unless they are delivered on time, and unless there is confidence on all the other points which will be so familiar to my hon. Friend from his experience in the shipbuilding industry in what we must now call the good old days.

Dr. David Clark (South Shields)

In view of the lack of clarity of one of the Secretary of State's earlier answers, could he tell the House whether or not it is the Government's intention to allow our warship yards to be owned wholly or partially by foreign owners"

Mr. Tebbit

I repeat that, in any case where I think it is in the national interest to exclude particular persons or companies from taking holdings, I will do so. The hon. Gentleman, and his right hon. Friend the Member for Bethnal Green and Stepney (Mr. Shore), will recollect what I said at the time of the wild accusations made about my intentions on INMOS. I will leave the formula where I have put it.

Mr. Mike Woodcock (Ellesmere Port and Neston)

Does not my right hon. Friend agree that the so-called profitability of the warship yards is the direct result of the cost-plus system of pricing, and that if those yards had to compete in the same world markets as the merchant yards, they would probably appear no more efficient or profitable?

Mr. Tebbit

Who can be sure about these things? There may be some significance in the fact that our warship yards have been unable to sell warships of a substantial size in world markets for many years now.

Mr. Roland Boyes (Houghton and Washington)

People will not believe a word of what the Secretary of State has said about the effect on employment. This is just another example of the behaviour of this uncaring Government, who are prepared to line the pockets of their friends from the profits of one section of the shipbuilding industry at the expense of another section. Those massive profits could have been used to subsidise further shipbuilding, rather than to make the right hon. Gentleman's pals even richer than they already are.

Mr. Tebbit

I did not detect a question in what the hon. Gentleman has said, but I would observe that there are those who would dispute the right of the hon. Gentleman to speak for people as a whole.

Mr. Kenneth Carlisle (Lincoln)

Would not my right hon. Friend accept that his announcement is welcome because the scale of losses suffered by British Shipbuilders in recent years is unacceptable? However, when the warship yards are denationalised, they will depend to a considerable extent on export markets. Is it not important that the Ministry of Defence should order ships of a type which is also acceptable overseas? It has not often done so in the past.

Mr. Tebbit

My hon. Friend is right. The losses that we have suffered, and the total subsidy of well over £1 billion in six years, are unacceptable. My hon. Friend is also right to say that, if the warship building yards are to do as well as we hope they will, they will have to look overseas for orders. Steps taken by the Royal Navy in some of its new frigate orders and designs are helpful, but the yards themselves may have to urge even more change upon the Navy.

Mr. Harry Ewing (Falkirk, East)

As the statement deals with the future of British Shipbuilders to 1987–88, why did the Secretary of State instruct Graham Day to withhold certain information on the future of British Shipbuilders from the Select Committee on Trade and Industry? Is the Secretary of State aware that we do not believe that this is the full story? Bad enough though the statement is, we are apprehensive about what is in the interim strategy plan that he instructed Graham Day to prepare for consideration by him and his Department.

As to the £1 billion to which the Secretary of State has continually referred, how does it compare with the support given to shipbuilding industries in our competitors' countries? The Secretary of State must know the figures. He must be aware that a vast amount of that £1 billion was used not to restructure or expand the industry but to buy out 42,000 jobs, with the result that the number of people employed in the shipbuilding industry has declined by about 47,000. Why is the Secretary of State so grudging in his tributes to the work force who have co-operated in this exercise for several years, have reduced their bargaining units from 161 to just one and have introduced flexible bargaining as no other industry has introduced it recently?

Is the Secretary of State aware that we find it astonishing that, following his experience of the Falklands war, he seems unable to link merchant shipping with warship building? He of all people must realise that there is a connection between warship building and merchant shipping. As my right hon. and hon. Friends have said, the stripping away of the warship building division will seriously damage the merchant shipping industry. Will he confirm that, once the warship building division is privatised, there will be included in the sale conditions an obligation on the Government to carry the risk in the contracts that prevail at the time of the sale of any warship yard? It is important for the House and the country to understand that. The Secretary of State could easily sell warship yards, whether at Yarrow or anywhere else, while still carrying the risks for the contracts that go with their sale. There is now the greatest doubt about his ability to discharge his duties in the best interests of the British people.

Mr. Tebbit

If I may respond to the hon. Gentleman's winding-up speech, perhaps I might observe that it was made perfectly clear in the Government's reply to the first report of the Liaison Committee in the 1983–84 Session that there is always the possibility that differences of opinion may arise between Ministers and Select Committees as to whether it would be in the public interest for some information, whether relating to nationalised industries or any other public matter, to be disclosed to a Select Committee.

The Government remain of the view that it is not in the best interests of the good management of nationalised industries or of their relationship with sponsoring Departments that documents such as those which were requested should be supplied to Select Committees. None the less, in the final analysis, it is for the House to decide whether the power of a Select Committee should be enforced. The Select Committee was given the documents for which it asked. I assure the hon. Gentleman that the corporate plan contains no specific plans to close shipyards. He must just take it that I asked Mr. Day to withhold the information because I thought that it was in the best interests of British Shipbuilders for it to be withheld. In regard to the warship yards, I assure the hon. Gentleman that I shall act in what I believe to be the best interests of Britain.

Mr. Dixon

On a point of order, Mr. Speaker. All right hon. and hon. Members who have been here since I was elected in 1979 have grown accustomed to the personal abuse of the Secretary of State.

Mr. Speaker

Order. Raise a point of order for me, please.

Mr. Dixon

Yes, this is a matter for you, Mr. Speaker. I believe that your job is to safeguard the interests of Back Benchers in statements and during questions. When the Secretary of State referred to me, I did not hear what he said because I had my deaf side turned to him—not that I am worried about what he says about me. However, I heard him say in reply to my hon. Friend the Member for Houghton and Washington (Mr. Boyes) that he doubted my hon. Friend's ability to speak for the people he represents. The matter is in order as we are discussing parliamentary language. If an hon. Member tells lies, we are not allowed to call him a liar. I can understand that, but is it right for the Secretary of State for Trade and Industry to say that he doubts the ability of an hon. Member, who has one of the highest majorities in the north of England, to speak for those whom he represents?

Mr. Speaker

Many rough things are said in this House. We just have to be robust in our attitude to them.

Mr. Tebbit

Further to the point of order, Mr. Speaker. I would say to the hon. Gentleman that if Hansard records my saying what the hon. Gentleman accuses me of saying, I shall be only too willing to apologise, but I am pretty certain that it will not do so. The hon. Gentleman will recall that, last time a fake point of order such as this was raised, I was proved right and Opposition Members were proved wrong.